Hurley v. 51 East Houston St., Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

__________________________________________
       )
UNITED STATES SECURITIES AND      )
EXCHANGE            COMMISSION,                                    )
       )
Applicant, )  Civil Action No. 14-cv-10163
                                                                                    )
v.                                                )
 )  Hon. John Z. Lee
NAVISTAR INTERNATIONAL CORP.,   )  Hon. Mag. Judge Susan E. Cox
    )
Respondent.                                    )
__________________________________________  )

MEMORANDUM IN SUPPORT OF SECURITIES AND EXCHANGE COMMISSION’S
FIRST AMENDED APPLICATION FOR AN ORDER COMPELLING COMPLIANCE
WITH ADMINISTRATIVE SUBPOENAS

  Eric M. Phillips
   Amy Flaherty Hartman
   Anne Graber Blazek
   U.S. SECURITIES AND EXCHANGE
            COMMISSION
   175 W. Jackson Blvd., Suite 900
   Chicago,   IL   60604
   Telephone:   (312)   353-7390
   Fax: (312) 353-7398

Attorneys for Plaintiff United States Securities
and Exchange Commission

i

TABLE OF CONTENTS
INTRODUCTION...................................................................................1
I.  FACTS.............................................................................................4
A. The SEC’s Investigation.............................................................4
B. Navistar’s Responses to the SEC’s Subpoenas and Its Privilege Claims......4

1. Navistar’s Privilege Claims Over Communications Involving Only
Non-Attorneys...............................................................5

2. Navistar’s Privilege Claims Over Communications Involving
Lobbying and Communications Firms....................................6

              3.   Navistar’s Privilege Claims Over Draft SEC Filings...................8

C. Efforts to Resolve Disputes Over Navistar’s Privilege Claims.................8
D. Facts Relating to Navistar’s Efforts to Obtain a Certificate of Conformity
from the EPA ..............................................................................9

  1.  The EPA Enacts a 0.2 NOx Standard for Heavy-Duty Diesel
       Engines.......................................................................9

  2.  Navistar Develops an “EGR” Technology Different from Its
       Competitors.................................................................10

  3.  Navistar Relies On Emissions Credits to Sell Engines While It
       Attempts to Obtain EPA Certification...................................10

    4.  As Navistar Begins to Run Out of Emissions Credits, The EPA
         Passes an Interim Final Rule Regarding Nonconformance
         Penalties......................................................................11
   5.   Navistar Retains ASGK as a Consultant for Public Affairs and
               Related Matters.............................................................12
   6.   Navistar Hires Law and Lobbying Firm Williams & Jensen.........14
   7.   Navistar Retains Alston & Bird for Lobbying Services...............15
   8.   Navistar Also Retains Tyrone Fahner of Mayer Brown as a
         Lobbyist......................................................................19

ii

   9.   Navistar Shifts Its Strategy to Adopt SCR Technology...............20
 II.  ARGUMENT..................................................................................21
 A.  This Court is Empowered to Grant the Relief Sought...........................21
  B.  The Attorney-Client Privilege and Work Product Doctrine Are Narrowly
        Construed..............................................................................22
  C.  The Attorney-Client Privilege Only Applies to Communications Necessary
              for the Giving or Seeking of Legal Advice.......................................22
  D.  The Work Product Doctrine Only Applies to Documents Created Because
        of the Prospect of Litigation.........................................................23
  E.  Navistar Improperly Has Asserted Privilege Over the Lobbying and/or
       Communications Firms’ Documents...............................................24
1. Neither the Attorney-Client Privilege Nor Work Product Doctrine
Applies to Communications Involving Public Affairs and
Communications Consultant ASGK......................................25

 a.  Communications Including ASGK Neither Involve The
      Giving or Seeking of Legal Advice Nor Were Created in
      Anticipation of Litigation..........................................25

  b.  Navistar Waived Any Privileges on Documents in Which
       It Included ASGK as a Third-Party Participant................27

                                                c.                                    Communications            Involving Only Non-Attorney ASGK
          Employees Presumptively Are Non-Privileged................28
   2.  Communications Involving Lobbying Firm Alston & Bird Are Not
        Privileged.....................................................................30
    a.  Alston & Bird Provided Lobbying Services, Not Legal
         Services, To Navistar...............................................30
                                                b.                        Communications            or            Notes            Involving Alston & Bird, Acting
         as a Lobbying Firm, Are Not Privileged.........................31
    c.  Even Assuming That Alston & Bird Was Acting as a Law
         Firm, Not All Communications With Alston & Bird Are
         Privileged.............................................................32
                                    3.                        Communications            or Notes Involving Lobbyist Tyrone Fahner of Mayer
        Brown Are Not Privileged...................................................33
4.  Communications Involving Lobbying Firm Williams & Jensen Are
Not Privileged.................................................................35

iii

F.  Navistar Improperly Has Asserted Privilege Over Internal Navistar Non-
Attorney Communications.........................................................36
G.  Navistar Improperly Has Asserted Privilege Over Draft SEC Filings And
Communications Regarding Those Filings.......................................37
  1.  Draft SEC Filings or Communications Regarding Those Filings
      Do Not Constitute Work Product.........................................37
  2.  The Attorney-Client Privilege Does Not Protect the Draft SEC Filings
      Redacted and Withheld by Navistar......................................38

 CONCLUSION...................................................................................42

iv

TABLE OF AUTHORITIES
Cases
Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 152 F.R.D. 132 (N.D. Ill. 1993)...........22, 23, 34
A&R Body Specialty and Collision Works v. Progressive Casualty Ins. Co., 2014 WL 657688
 (D. Conn. Feb. 20, 2014)..................................................................31, 32, 34
Autor v. Pritzker, 740 F.3d 176 (D.C. Cir. 2014)........................................................34
Baxter Travenol Labs. v. Abbott Labs., 1987 WL 12919 (N.D. Ill. June 19, 1987).................28
Binks Manufacturing Co. v. Nat’l Presto Indus., 709 F.2d 1109 (7
th
 Cir, 1983).....................24
Black & Veatch Corp. v. Aspen Ins. (UK) Ltd., 297 F.R.D. 611 (D. Kan. 2014)...............29, 36
BSP Software v. Motio, 2013 WL 3456870 (N.D. Ill. July 9, 2013)..................................27
Burden-Meeks v. Welch, 319 F.3d 897 (7
th
 Cir. 2003)..................................................32
Christman v. Brauvin Realty Advisors, Inc., 185 F.R.D. 251 (N.D. Ill. 1999).......................38
Comtide Holdings, LLC v. Booth Creek Mgmt. Corp., 2010 WL 5014483 (S.D. Ohio Dec. 3,
            2010)..................................................................................................29

Construction Workers Pension Fund – Lake County and Vicinity v. Navistar International Corp.,
 2014 WL 3610877 (N.D. Ill. July22, 2014).......................................................9

DeGeer v. Gillis, 755 F. Supp. 2d 909 (N.D. Ill. 2010).................................................21
Digital Vending Services Int’l v. The University of Phoenix, 2013 WL 1560212 (E.D. Va. April
            12,            2013).............................................................................................36

ePlus, Inc. v. Lawson Software, 280 F.R.D. 247 (E.D. Va. 2012).....................................28
Evans v. City of Chicago, 231 F.R.D. 302 (N.D. Ill. 2005)...........................31, 33, 34, 36, 39
Flagstar Bank  v. Freestar Bank, 2009 WL 2706965 (N.D. Ill. Aug. 25, 2009).....................26
Freeport-McMoran Sulphur, LLC v. Mike Mullen Energy Equipment Resource, Inc., 2004 WL
 1299042 at *6-*7 (E.D. La. June 4, 2004).......................................................39

v

Hill v. State Street Corp., 2013 WL 6909524 (D. Mass. Dec. 30, 2013)........................27, 37
Hobley v. Burge, 433 F.3d 946 (7
th
 Cir. 2006)...........................................................21
In re Application of Chevron Corp., 749 F. Supp. 2d 141 (S.D.N.Y. 2010)................31, 32, 34
In re Avandia Marketing, Sales Practices and Prod. Liab., 2009 WL 4807253 (E.D. Pa. Oct. 2,
            2009)..................................................................................................39

In re Bank One Secur. Litig., 209 F.R.D. 418 (N.D. Ill. 2002)....................................24, 38
In re Behr Dayton Thermal Prods., 298 F.R.D. 369 (S.D. Ohio 2013)...........................29, 36
In re Bisphenol-A (BPA) Polycarbonate Plastic Prods. Liab. Litig., 2011 WL 1136440
 (W.D. Mo. Mar. 25. 2011).........................................................................31

In re Carl Walsh, 623 F.2d 489 (7
th
 Cir. 1980)..........................................................23
In re Chase Bank USA, N.A. Check Loan Contract Litig., 2011 WL 3268091 (N.D. Cal. July 28,
2011)...........................................................................................................29
In re Lindsey, 148 F.3d 1100 (D.C. Cir. 1998)...........................................................31
In re JPMorgan Chase & Co. Secur. Litig., 2007 WL 2363311 (N.D. Ill. Aug. 13, 2007)........38
In re Mortgage Store, 509 B.R. 292 (Bankr. D. Haw. 2014)..........................................27
In re Prograf Antitrust Litig., 2013 WL 1868227 (D. Mass. May 3, 2013)..........................25
In re Vioxx Prods. Liab. Litig., 501 F. Supp. 2d.( E.D. La. 2007)................................37, 39
Ivy Hotel San Diego, LLC v. Houston Casualty Co., 2011 WL 4914941(S.D. Cal. 2011).........21
Jackson v. Deen, 2013 WL 1911445 (S.D. Ga. May 8, 2013).........................................27
Kleen Prods. v. Int’l Paper, 2014 WL 6475558 (N.D. Ill. Nov. 12, 2014).......................23, 39
Knox Energy v. Gasco Drilling, 2014 WL 4052806 (W.D. Va. Aug. 14, 2014)....................27
Lee v. Chicago Youth Centers, 2014 WL 2618537 (N.D. Ill. June 10, 2014)......23, 33, 34, 36, 39
LG Electronics U.S.A., Inc. v. Whirlpool Corp., 661 F. Supp. 2d 958 (N.D.Ill. 2009).............26

vi

Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577 (7th Cir. 1981)..........................................23
Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012).........................................9,11,12
McCook Metals L.L.C. v. Alcoa Inc., 192 F.R.D. 242 (N.D. Ill. 2000)...............................22
McNamee v. Clemens, 2013 WL 6572899 (E.D.N.Y. Sept. 18, 2013)...........................25, 26
Nat’l Ass’n of Manufacturers v. Taylor, 582 F.3d 1 (D.C. Cir. 2009).................................30
Newmarkets Partners LLC v. Sal. Oppenheim Jr. & Cie. S.C.A., 258 F.R.D. 95,
            (S.D.N.Y.            2009).....................................................................................32

Preferred Care Partners Holding Corp. v. Humana, Inc., 258 F.R.D. 684 (S.D. Fla. 2009)......39
PSK v. Hicklin, 2010 WL 2541795 (N.D. Iowa June 22, 2010).......................................28
Rawat v. Navistar Int’l Corp., 2010 WL 1417840 (N.D. Ill. Apr. 7, 2010).....................24, 38
RBS Citizens v. Husain, 291 F.R.D. 209 (N.D. Ill. 2013)..........................................38, 40
Resurrection Healthcare and Factory Mut. Ins. Co. v. GE Health Care, 2009 WL 691286 (N.D.
 Ill. Mar. 16, 2009)...................................................................................38

Sandra T.E. v. South Berwyn School District 100, 600 F.3d 612 (7
th
 Cir. 2010)....................32
SEC v. Chesnoff, 2006 WL 2052371 (N.D. Tex. July 18, 2006).......................................22
SEC v. Shanahan, 504 F. Supp. 2d 680 (E.D. Mo. 2007)...............................................22
Smithkline Beecham Corp. v. Apotex Corp., 193 F.R.D. 530, 538 (N.D. Ill. 2000).................41
Sprecher v. Graber, 716 F.2d 968 (2
d
 Cir. 1983)........................................................22
Traficante v. Homeq Servicing Corp., 2010 WL 3167435 (W.D. Pa. Aug. 10, 2010)..............28
United Food and Commercial Workers Union v. Chesapeake Energy Corp., 2012 WL 2370637
 (W.D. Okla. June 22, 2012)........................................................................39

U.S. v Evans, 113 F.3d 1457 (7th Cir. 1997).............................................................22
U.S. ex. rel. Fields v. Sherman Health Sys., 2004 WL 905934 (N.D. Ill. April 28, 2004)..33,34,36

vii

U.S. v. Hatfield, 2009 WL 3806300 (E.D.N.Y. Nov. 13, 2009)........................................32
U.S. Home Corp. v. Settlers Crossing, LLC, 2012 WL 5193835 (D. Md. Oct. 18, 2012)............6
U.S. v. White, 950 F.2d 426 (7th Cir. 1991)..............................................................22
Wartell v. Purdue Univ., 2014 WL 4261205 (N.D. Ind. Aug. 28, 2014).............................32
Wierciszewski v. Granite City Illinois Hosp. Co., 2011 WL 5374114 (S.D. Ill. Nov. 7, 2011)...29
Rules
Rule 10(b)-5....................................................................................................4
Rule 26(b)(5)(B)...............................................................................................6
Statutes
2 U.S.C. § 1602(7)............................................................................................30
2 U.S.C. § 1602(8)(A)........................................................................................30
2 U.S.C. § 1602(10).....................................................................................30, 34
15 U.S.C. § 77v(b)...........................................................................................21
15 U.S.C. § 78u(c)...........................................................................................21
Section 17(a) of the Securities Act of 1933................................................................4
Section 10(b) of the Securities Exchange Act of 1934...................................................4
Section 22(b) of the Securities Act of 1933...............................................................21
Section 21(c) of the Securities Exchange Act of 1934..................................................21
Other Authorities
Illinois State Bar Association Opinion on Professional Conduct No. 98-04 (January 1999).......6

1

INTRODUCTION

 Applicant, the United States Securities and Exchange Commission (“SEC”), respectfully
requests that this Court compel respondent Navistar International Corp. (“Navistar”) to produce
certain documents that Navistar improperly has redacted and withheld as privileged in response
to SEC investigative subpoenas.
The SEC staff is conducting an investigation to determine whether Navistar and others
may have violated the federal securities laws by making false or misleading statements or
material omissions, including in Navistar’s public filings with the SEC.  The current focus of the
SEC’s investigation relates to statements made by Navistar and others regarding Navistar’s
efforts to obtain a certificate of conformity (“Certificate”) from the U.S Environmental
Protection Agency (“EPA”) (certifying that Navistar’s engines complied with certain provisions
of the Clean Air Act).  The SEC is conducting its investigation through its Chicago Regional
Office, based in this District.  Navistar is a publicly traded company based in Lisle, Illinois.  The
SEC’s investigation is ongoing; neither the SEC nor its staff has concluded that any person or
entity has engaged in wrongdoing.
The SEC has issued various investigative subpoenas to Navistar from 2012 through the
present.  The focus of the SEC’s subpoenas since May 2013 has related to Navistar’s EPA
certification efforts, while the SEC’s earlier subpoenas related to other matters.
The SEC has also issued subpoenas to the firms of ASGK Public Strategies (“ASGK”),
Alston & Bird LLP (“Alston & Bird”), Mayer Brown LLP (“Mayer Brown”), and Williams &
Jensen, each of which performed lobbying and/or communications-related services (collectively,
the “Lobbying and Communications Firms”) to Navistar.  The SEC’s subpoenas to these firms
requested information about the nature of their work for Navistar and about their

2

communications with Navistar and others concerning their work.  This information bears directly
on whether Navistar’s understanding of the progress of its efforts to obtain EPA certification, as
reflected in its lobbying efforts and its communications with others, was consistent with its
public statements regarding this issue.
In response to the SEC’s subpoenas to the Lobbying and Communications Firms,
Navistar, as the Lobbying and Communications firms’ client, determined which of their
documents would be redacted and withheld as privileged, and prepared privilege logs provided to
the SEC on behalf of the Lobbying and Communications Firms.
1

 Navistar has produced many thousands of documents in response to the SEC’s
subpoenas, but it also has redacted and withheld thousands more documents based on the
attorney-client privilege and work product doctrine.  Navistar has provided the SEC with
privilege logs for most, but not all, of the documents Navistar has redacted and withheld as
privileged.
The SEC has not challenged many of Navistar’s privilege assertions.  Among other
things, the SEC generally is not challenging Navistar’s privilege assertions over communications
directly involving Navistar’s attorneys, acting in a legal capacity, where the attorneys were the
senders or primary recipients of the communications.  But many of Navistar’s other privilege
assertions appear plainly to be incorrect based on the applicable law governing privilege claims,
based on Navistar’s descriptions of redacted and withheld documents, and based on the SEC
staff’s review of documents that Navistar clawed back on privilege grounds after the staff
already had reviewed the supposedly privileged materials.

1
 As part of the SEC’s request that the Court conduct an in camera  review of the documents that Navistar
has redacted and withheld from the Lobbying and Communications Firms’ productions, the SEC will
provide the Court with copies of the privilege logs provided to the SEC for the Lobbying and
Communications Firms.

3

Many of Navistar’s assertions of the attorney-client privilege and work product doctrine
in support of its redactions and withholding of documents fall into three broad categories: (1)
documents involving the Lobbying and Communications Firms; (2) communications involving
only non-attorneys, including non-attorney notes; and (3) draft SEC filings and communications
regarding those filings.  While it appears that Navistar improperly has asserted privilege over
thousands of documents, the SEC is attempting to narrow the dispute before the Court by
focusing on those documents that appear most important to the SEC’s investigation, as well as
documents that implicate privilege issues common to many of Navistar’s privilege claims.
None of the documents falling into these three categories were prepared in anticipation of
litigation, and, therefore, the work product doctrine does not apply.  Further, none of the
documents involve the seeking or giving of legal advice, and therefore the attorney-client
privilege does not protect the documents either.  Even if the attorney-client privilege would
protect the documents from disclosure, Navistar has waived the privilege over many of the
documents as to which it claims privilege.  Navistar has waived the privilege by sending certain
of the documents to third-parties, such as the Lobbying and Communications Firms.
The SEC now asks the Court to conduct an in camera review of documents that Navistar
improperly has redacted and withheld involving the Lobbying and Communications Firms,
communications involving only non-attorneys, and draft SEC filings and communications
regarding those filings.
2
  Because these documents are not privileged, the Court should order
Navistar to produce them after the Court conducts its in camera review.

2
 It appears that there is significant duplication in Navistar’s privilege logs.  For example, Navistar has
made separate privilege log entries for different copies of a single email, contained in various email
strings in the electronic mailboxes of various custodians.  The SEC is not requesting that the Court
conduct an in camera review of duplicate versions of documents that Navistar has redacted and withheld.
When taking duplication into account, the SEC estimates that it is requesting that the Court conduct an in
camera review of several hundred documents.

4

I. Facts
A. The SEC’s Investigation
In July 2012, the SEC issued a Formal Order captioned In the Matter of Navistar Corp.,
SEC File No. C-7947-A.  (Declaration of Robert J. Burson, submitted herewith, ¶ 4)  The Formal
Order designates and empowers certain members of the SEC’s staff as officers of the SEC to,
among other things, subpoena witnesses for testimony, compel their attendance, gather evidence
and require the production of materials relevant to the investigation.  (Id.)
This investigation concerns the activities of Navistar, a manufacturer and marketer of
integrated mid-range and heavy-duty diesel engines and trucks.  (Id.)  Pursuant to this
investigation, the SEC seeks, among other things, information regarding whether Navistar and its
representatives have engaged in violations of the antifraud provisions of the federal securities
laws, Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the
Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.  (Id.)
B. Navistar’s Responses to the SEC’s Subpoenas and Its Privilege Claims
In response to the SEC’s subpoenas to Navistar, Navistar has produced hundreds of
thousands of pages of documents, but it has also redacted and withheld many thousands of
pages more as privileged.  (Burson Decl., ¶ 10)  In a May 2014 letter to the SEC, Navistar’s
counsel advised that as of that date, Navistar had produced privilege logs
3
 itemizing more than
2,500 redactions and withheld documents and expected to log an additional 3,500 redactions
and withheld documents.  (Id.)  In a July 2014 letter, Navistar’s counsel advised that as of that
date, Navistar had withheld an additional 983 documents sent between Navistar and its outside
counsel that Navistar had not logged on a privilege log.  (Id.)  Subsequent to this letter, Navistar

3
 As part of the SEC’s request that the Court conduct an in camera  review of certain documents that
Navistar has redacted and withheld, the SEC will provide the Court with copies of the privilege logs
provided by Navistar for documents relating to engine certification issues.

5

produced several additional privilege logs to the SEC itemizing several hundred additional
redactions and withheld documents.  Many of Navistar’s assertions of the attorney-client
privilege fall into three broad categories:
1. Navistar’s Privilege Claims Over Communications Involving Only Non-
Attorneys

The majority of communications that Navistar has redacted and withheld as privileged in
response to the SEC’s subpoenas are communications involving only non-attorneys, including
non-attorney notes.  Even though the communications involve only non-attorneys, Navistar has
claimed privilege over the communications – usually asserting both the attorney-client privilege
and the work product doctrine – by claiming that the communications “memorialize,” “reflect,”
or “reflect material memorializing” a communication to or from an attorney.  (See, e.g., 11-5-14
Withheld Documents Privilege Log, Entry Nos. 76-79, 81-84; 11-10-14 Withheld Documents
Privilege Log, Entry No. 6; 11-10-14 Redacted Documents Privilege Log Entry Nos. 1-9, 12-
16)  Using this rationale, Navistar has redacted and withheld thousands of communications
involving only non-attorneys.
The SEC acknowledges that, as a general principle, communications involving only non-
attorneys can be privileged under some circumstances.  But Navistar’s privilege claims are
unusual in that the majority of its many thousands of privilege claims apply to documents that
no attorney has wrote, sent, or received.
In April 2014, Navistar’s counsel wrote to the SEC staff identifying 56 documents that
Navistar asserted had inadvertently been produced despite being protected by privilege.
Navistar requested that the SEC immediately destroy all of these documents and return them to
Navistar.  The SEC staff responded that the staff had already reviewed some of these
documents.  The SEC staff agreed to destroy any of these documents that the staff had not

6

already reviewed or where the staff agreed with Navistar’s privilege claims, but as to the
remainder, the SEC staff agreed to sequester them and not use them in the investigation, except
to the extent such use was necessary to resolve privilege disputes and until any such privilege
disputes were resolved.
4
  To assess Navistar’s privilege claims over the documents the SEC
staff already had reviewed, the SEC re-reviewed these documents.  None of the senders or
recipients of these documents were attorneys.  The staff concluded that few of Navistar’s
privilege claims with respect to those documents were valid.  This assessment informed the
SEC’s view of Navistar’s privilege claims regarding other documents involving only non-
attorneys.
2. Navistar’s Privilege Claims Over Communications Involving Lobbying
and Communications Firms

Navistar has redacted and withheld as privileged hundreds of communications involving
the Lobbying and/or Communications Firms of ASGK, Mayer Brown, Alston & Bird, and
Williams & Jensen, although Navistar’s approach has varied somewhat within this group of
firms.  (Burson Decl., ¶ 11)  In response to the SEC’s subpoenas to the firms of ASGK and
Williams & Jensen, Navistar asserted privilege over approximately 163 documents and 38
documents, respectively, and permitted ASGK and Williams & Jensen to produce a significant
number of documents to the SEC without privilege claims.  With respect to the SEC’s
subpoenas to Alston & Bird, Navistar withheld as privileged all substantive communications
between Navistar and Alston & Bird, and among Alston & Bird lawyers and non-lawyers, as

4
Various authorities permit a party who reviews a document prior to a privilege being asserted over the
document to use the document in an effort to resolve a privilege dispute.   See, e.g., U.S. Home Corp. v.
Settlers Crossing, LLC, 2012 WL 5193835 at *5 (D. Md. Oct. 18, 2012) (“It would be wholly illogical to
read Rule 26(b)(5)(B) as prohibiting the use of documents ‘subject to a claim of privilege’ when resolving
that very claim of privilege.”); cf. Ill. State Bar Ass’n Opinion on Professional Conduct No. 98-04
(January 1999) (it is “unrealistic” for a receiving lawyer to “unring the bell” and ignore material
information that has been received and reviewed in good faith.)

7

well as notes created by Alston & Bird, collectively withholding approximately 316 documents.
Navistar permitted Alston & Bird to produce communications between Alston & Bird and third-
parties (mostly public officials and their staffs) in unredacted form.  With respect to the SEC’s
subpoena to Mayer Brown, Navistar has withheld virtually all substantive documents involving
Mayer Brown, totaling approximately 193 documents.  (See ASGK, Williams & Jensen, Alston
& Bird, and Mayer Brown Privilege Logs)
In November 2014, the SEC staff determined that the ASGK and Williams & Jensen
document productions contained certain documents in unredacted form that Navistar
simultaneously had redacted and withheld as privileged in other productions in response to SEC
subpoenas.  The SEC staff alerted Navistar’s lawyers to this issue, and Navistar responded by
asserting privilege over most of these documents and demanding that the unredacted documents
be destroyed.  The SEC staff sequestered these documents.  Having already reviewed the
portions of these documents that Navistar claimed to be privileged, the SEC staff re-reviewed
the documents to assess Navistar’s privilege claims.  The staff believes none of Navistar’s
privilege claims with respect to these documents are valid.  This assessment informed the SEC’s
view about Navistar’s assertion of privilege over other documents involving the Lobbying and
Communications Firms.
3. Navistar’s Privilege Claims Over Draft SEC Filings
Navistar also has redacted and withheld certain draft SEC filings and communications
regarding those filings, mostly on the grounds of both the attorney-client privilege and work
product doctrine.  As a result, Navistar has redacted and withheld draft language in Navistar’s
SEC filings relating to Navistar’s efforts to obtain a certification from the EPA, which is part of
the focus of the SEC’s investigation.  Mostly non-attorneys were involved in the

8

communications relating to SEC filings that Navistar has redacted and withheld.
C. Efforts to Resolve Disputes Over Navistar’s Privilege Claims
Over many months, the SEC staff repeatedly has attempted to resolve its disputes with
Navistar over Navistar’s privilege claims.  (Burson Decl., ¶ 12)  In addition to several telephone
conversations and in-person discussions in which SEC staff questioned Navistar’s privilege
assertions, on August 8, 2014, the SEC wrote a detailed letter to Navistar’s counsel outlining the
SEC’s challenges to many of Navistar’s privilege claims.  (Id.)  The SEC followed with a second
letter to Navistar dated August 28, 2014, which focused on Navistar’s privilege claims over
certain of the Lobbying and Communications Firms’ documents responsive to the SEC’s
subpoenas.  On September 24, 2014, the SEC staff conducted a meet-and-confer session in the
office of Navistar’s counsel in an effort to resolve the privilege disputes.  (Id.)  Subsequent to
this meeting, the SEC staff continued to communicate with Navistar’s counsel by telephone and
email in an effort to resolve the parties’ disputes over Navistar’s privilege claims.  (Id.)
These efforts narrowed, but did not resolve fully, the privilege disputes between the SEC
and Navistar.  Prior to filing this subpoena enforcement action, Navistar agreed to withdraw its
claims of attorney-client privilege over documents provided by Navistar to its independent
auditor, KPMG, LLP.  Additionally, Navistar agreed to revise or eliminate redactions on
approximately 264 additional documents, approximately 65 of which were produced without any
redactions.  (Id.)  After the SEC originally filed this subpoena enforcement action in December
2014 and before the SEC filed its First Amended Application, Navistar changed or withdrew its
privilege claims on a number of additional documents.  But even after Navistar’s changes to its
privilege claims, many documents remain in dispute.  (Id.)  Because the parties’ attempts to
resolve their disputes without court action did not substantially eliminate the parties’ disputes,

9

and because the documents redacted and withheld by Navistar are relevant and important to the
SEC’s investigation, the SEC staff notified Navistar that the SEC would file this Application.
(Id.)
D. Facts Relating to Navistar’s Efforts to Obtain a Certificate of Conformity
from the EPA
5

The SEC’s Application is directed at Navistar’s improper assertion of privilege over
documents relating to Navistar’s efforts to obtain a Certificate from the EPA, and Navistar’s
disclosures regarding the status of those efforts.  The SEC provides some factual background
regarding these efforts below.
1. The EPA Enacts a 0.2 NOx Standard for Heavy-Duty Diesel Engines
As a manufacturer of heavy-duty diesel engines, Navistar must obtain a Certificate from
the EPA each year for each type of engine that Navistar sells.  A Certificate from the EPA
confirms that the engine meets the Clean Air Act standards.
In 2001, pursuant to the Clean Air Act, the EPA enacted a rule requiring a 95 percent
reduction in the emissions of nitrogen oxide (“NOx”) from heavy-duty diesel engines by 2010.
Under this rule, new engines were to emit NOx at a rate of no more than 0.2 grams of nitrogen
oxide per horsepower hour (“0.2 NOx”) by 2010 (the “0.2 NOx standard”).
2. Navistar Develops an “EGR” Technology Different from Its Competitors
To comply with the 0.2 NOx standard, Navistar’s competitors opted to develop a
technology called selective catalytic reduction (“SCR”).  SCR technology controls NOx

5
 The facts set forth in this section generally are derived from: (1) the D.C. Circuit’s opinion in Mack
Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012); (2) the April 9, 2012 Declaration of Patrick E.
Charbonneau filed by Navistar (attached hereto as Exhibit A) in support of its Brief as Intervenor in the
Mack Trucks litigation in the D.C. Circuit; (3) Judge Ellis’ opinion in the class action lawsuit captioned
Construction Workers Pension Fund – Lake County and Vicinity v. Navistar International Corp., 2014
WL 3610877 (N.D. Ill. July 22, 2014); and (4) Navistar’s Memoranda in Support of its Motions to
Dismiss the Construction Workers Pension Fund class action.  (Dkt. Nos. 100, 133 in Case No. 13 C
2111 (N.D. Ill.)).

10

emissions in the exhaust stream by using a special after-treatment system and a diesel-based
chemical agent.  Using SCR, Navistar’s competitors had obtained Certificates from the EPA by
2010 indicating that the engines manufactured by these companies met the 0.2 NOx standard.
Navistar, however, chose a different path from its competitors to try to meet the 0.2 NOx
standard.  Instead of using SCR technology, Navistar opted to develop exhaust gas recirculation
(“EGR”)-only technology.  EGR-only technology reduces NOx emissions in the combustion
chamber by re-circulating a portion of an engine’s exhaust back into the engine’s cylinders.
Because EGR-only technology is designed to result in clean-burning engines, the technology
does not depend on other emission related components, such the after-treatment system
employed in SCR technology, to reduce emissions.
3. Navistar Relies On Emissions Credits to Sell Engines While It Attempts
to Obtain EPA Certification

Navistar used EGR-only technology to reduce NOx emissions in several EPA-certified
engines, including an engine that the EPA certified in 2010.  However, Navistar was
unsuccessful in using EGR-only technology to obtain a Certificate for an engine that met the 0.2
NOx standard.
Because Navistar was unable to develop EGR-only technology sufficiently to obtain a
Certificate for an engine meeting the 0.2 NOx standard, all else being equal, Navistar would have
been unable to sell certain engine families in the United States at some point in 2010.  However,
prior to 2010, Navistar had produced engines whose emissions were cleaner than required by the
EPA.  This allowed Navistar to generate a “bank” of EPA credits, which, under the EPA’s
emissions credits system, Navistar was allowed to use so it could continue to sell certain engine
families even though those engine families had not met the 0.2 NOx standard.  In 2010 and 2011,
Navistar continued to use these banked emissions credits legally to allow the sale of certain

11

engine families that did not meet the 0.2 NOx standard.
In the meantime, Navistar continued to try to develop the EGR-only technology and
obtain a Certificate for an engine that could meet the 0.2 NOx standard.  In February 2011,
January 2012, and May 2012, Navistar submitted applications to the EPA for certification at 0.2
NOx for one of its engine families.  According to Navistar, from 2001 through 2012, Navistar
devoted tens of thousands of employee hours and approximately $700 million in the
development of its EGR-only technology.  (See Ex. A, 4-9-12 Declaration of Patrick
Charbonneau in Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012), at ¶ 13).
4. As Navistar Begins to Run Out of Emissions Credits, The EPA Passes an
Interim Final Rule Regarding Nonconformance Penalties

As time passed, Navistar depleted its banked emissions credits by selling engines that did
not meet the 0.2 NOx standard.  In October 2011, Navistar informed the EPA that it would run
out of emissions credits sometime in 2012.
The EPA, estimating that Navistar might have as little as three to four months of credits
remaining, promulgated an Interim Final Rule (“IFR”) on January 31, 2012 aimed at facilitating
Navistar’s continued sale of certain engine families that did not meet the 0.2 NOx standard.  The
IFR made nonconformance penalties (“NCPs”) available to Navistar and permitted it to sell
heavy-duty diesel engines in model years 2012 and 2013 as long as it paid a penalty of $1,919
per engine and as long as the engines emitted fewer than 0.5 grams of nitrogen oxide per
horsepower hour (“0.5 NOx”).
6

Shortly after the EPA promulgated the IFR, Navistar’s competitors sued the EPA over the
IFR, claiming that the EPA lacked the requisite good cause to forego notice and comment
procedures with respect to the IFR and that the EPA erroneously determined through the IFR that

6
 Significantly, however, the California Environmental Protection Agency and the environmental
protection agencies of nine other states did not allow the use of NCPs to satisfy emissions standards.

12

NCPs should be available to Navistar.  Navistar intervened in the lawsuit on behalf of the EPA.
In June 2012, the D.C. Circuit vacated the EPA’s IFR.  See Mack Trucks, Inc. v EPA, 682 F.3d
87 (D.C. Cir. 2012).
5. Navistar Retains ASGK as a Consultant for Public Affairs and Related
Matters

In May 2012, Navistar retained ASGK, a firm co-founded by David Axelrod, a former
White House Senior Adviser, and Eric Sedler, a former adviser to Illinois House Speaker
Michael Madigan.  Navistar retained ASGK to perform services relating to Navistar’s efforts to
obtain a Certificate from the EPA.  It appears that Navistar and ASGK first began discussing
Navistar’s possible retention of ASGK in April 2012.  According to ASGK’s public website,
ASGK’s services include public affairs, corporate communications, coalition management and
stakeholder engagement, media and public relations, brand management, and crisis
communications.  (Ex. B, ASGK Website Excerpt)
According to an internal ASGK email early in the period of its Navistar engagement, in
May 2012, Navistar was “in the midst of a crisis at EPA right now related to certification of their
zero-emissions engine.”  (See Ex. C, 5-11-12 email Cantillon to DeAngelis)  According to the
email, ASGK’s statement of work for the engagement included generating: (1) a list of “third-
party organizations that can be activated to either put pressure on EPA or provide political cover
for certification;” (2) a “media plan;” (3) Navistar “plant/facility host community activation;”
and (4) “[w]ork on messaging materials.”  (Id.)  The email noted that “Patrick [Charbonneau] of
Govt Relations [at Navistar] is leading the crisis effort which [has] involved mostly lobbyists.”
(Id.)
As part of its work for Navistar, ASGK produced several iterations of an “issue
management plan,” the purpose of which was “to facilitate a clear-decision making infrastructure

13

of help Navistar manage a potentially high-profile and damaging issue.”  (See Ex. Y, 5-25-12
email Adler to Cantillon, Spangler, Culloton, and Denning, with attachment, at ASGK-NAV-E-
00003150)  In a May 25, 2012 version of the issue management plan that ASGK sent to
Navistar’s public relations personnel, ASGK proposed to help Navistar to develop a
“communications strategy [that] will closely mirror its business strategy with the goal of
obtaining one or two desired outcomes.”  (Id. at ASGK-NAV-E-00003152)  These two desired
outcomes were that either “Navistar receives .2 NOx engine certification from the EPA” or that
“Navistar continues working with the EPA and has a clear path to engine certification that can be
made public and will occur in a timely manner (before Navistar’s stock of pollution credits is
depleted.”)  (Id.)  ASGK told Navistar that “we will communicate with policymakers, the media
and stakeholders about what this case is all about and what’s fully at risk.”  (Id.)  ASGK
described the ASGK employees who would be working on the assignment as fulfilling a
“communications” role for Navistar.  (Id. at ASGK-NAV-E-00003152-53)
Navistar’s Vice-President of Government Relations, Patrick Charbonneau
(“Charbonneau”) (the head of Navistar’s government relations department in 2012), testified that
he hired ASGK as a lobbyist, though he modified that testimony after his attorneys objected.
(See Ex. D, 12-9-14 Charbonneau Test. at 40:23-42:8; 12-10-14 Charbonneau Test. at 408:14-
409:13)  Charbonneau testified that Navistar hired ASGK to communicate with the EPA and
with staff members of political offices Navistar interfaced with (id. at 43:1-11) and to reach out
to the White House regarding the “uneven playing field,” in Navistar’s view, between Navistar
and its competitors in terms of the EPA’s treatment of engine certification issues.  (Id. at 46:11-
22)
6. Navistar Hires Law and Lobbying Firm Williams & Jensen

14

At some point prior to 2012, Navistar retained the Washington law and lobbying firm of
Williams & Jensen to assist it with various matters.  According to Williams & Jensen’s public
website, Williams & Jensen has “over four decades of law & lobbying experience” and is “one
of the few independent law firms in Washington with a practice focused primarily on lobbying.”
(See Ex. E, Williams & Jensen Website Excerpt)  Williams & Jensen employs lawyers and non-
lawyers as lobbyists.  The individual who appears to have been principally responsible for
Williams & Jensen’s work for Navistar, Michael Beer, is not a lawyer and no longer works at
Williams & Jensen.  But according to his new firm’s public website, he is one of “a team of 6
lobbyists with more than eight decades of Washington lobbying experience, and with a total of
more than 100 years of directly relevant Washington experience in the Administration, in
Congress, and in the campaign world.”  (See Ex. F, Alignment Government Strategies Website
Excerpt)
Among other things, in 2012 Williams & Jensen was involved in lobbying for Navistar to
try to influence the EPA to issue a Certificate to Navistar for the 0.2 NOx emissions standard.
For example, in a May 2012 email to members of Navistar’s governmental relations department,
Beer suggested that, among others, Governor Quinn, Senator Durbin, and Senator Sherrod
Brown of Ohio serve as the public officials to “carry” Navistar’s “ask” of getting the EPA to
issue a Certificate to Navistar.  (See Ex. G, 5-15-12 email Beer to Gelb and Sheahan)  Beer also
suggested that other members of the U.S. Senate could weigh in on the effort to persuade the
EPA to issue a Certificate.  (Id.)  In another series of May 2012 emails, Beer and a member of
Navistar’s governmental relations department communicated with Senator Brown’s office about
the EPA certification issue, with Beer describing the issue as being as important “as the company
has had in the last ten years.”  (See Ex. H, 5-10-12 email string Gelb, Beer, Slevin, McCracken

15

and 5-11-12 email string McCracken, Beer)
Charbonneau, Navistar’s Vice-President of Government Relations, testified that Navistar
worked with Beer and Williams & Jensen on issues relating to the “uneven playing field,” in
Navistar’s view, between Navistar and its competitors, including reaching out to politicians and
their staff members about these issues.  (See Ex. D, 12-9-14 Charbonneau Test. at 45:13-46:3)
He also testified that in the past he had referred to Beer and Williams & Jensen as lobbyists on
engine certification issues, adding that the “general term lobbyist is for these type of companies
that can do lobbying but they aren’t necessarily doing lobbying for all these – the topics that I’m
talking about.”  (Id. at 408:14-409:13)
7. Navistar Retains Alston & Bird for Lobbying Services
In approximately 2011, Navistar retained the law and lobbying firm of Alston & Bird
LLP for a fixed fee of $25,000 per month.  (See Ex. I, 3-10-11 Letter Jones to Ustian)  Although
Alston & Bird is a large firm that employs lawyers who provide legal services, Alston & Bird
also employs lawyers and non-lawyers in its Legislative and Public Policy Group.  According to
Alston & Bird’s public website, the firm’s Legislative and Public Policy group is “a team that is
consistently recognized as one of the top lobbying firms in the country.”  (See Ex. J, Alston &
Bird Website Excerpt for William B. Anaya)  The team of Alston & Bird lawyers and non-
lawyers who provided services to Navistar appears to have been part of the firm’s Legislative
and Public Policy Group.  The team included former U.S. Senate Majority Leader and former
Republican Presidential nominee Bob Dole (see Ex. K, 5-11-12 email Dole to Jarrett), former
U.S. Senator Blanche Lincoln (a non-lawyer who is no longer with Alston & Bird), and former
U.S. Senate Agriculture Committee staff member Robert Holifield (also a non-lawyer who is no
longer with Alston & Bird).  (See Ex. L, 5-31-12 email Anaya to Jones, Tauzin, Lincoln,

16

Holifield; Ex. M, Lincoln Policy Group Website Excerpt).
In investigative testimony before the SEC staff, Navistar’s Director of Government
Relations, Brien Sheahan, described the Alston & Bird lawyers and non-lawyers working for
Navistar as “lobbyists.”  (See Ex. N, 6-6-14 Sheahan Test. at 100:14-16 (“Q: Who is Bill Anaya?
A: He’s a lawyer and a contract lobbyist with Alston & Bird, who was working on this.”); 117:3-
5 (“Q: Billy Tauzin? A: Former member of Congress and a lobbyist at Alston & Bird.”))
Similarly, ASGK’s draft Issue Management Plans for Navistar described Billy Tauzin and
Alston & Bird as Navistar’s “Outside Lobbying Partners.”  (See Ex. Y at ASGK-NAV-E-
00003152)
Consistent with this description, Alston & Bird’s documents produced to the SEC and not
withheld as privileged by Navistar show that Alston & Bird’s efforts were focused on lobbying
officials within the EPA, White House, Congress, and the office of the Illinois Governor to
influence the EPA to certify a 0.2 NOx engine for Navistar.  For example:
 In early May 2012, Alston & Bird’s Bob Jones emailed EPA Chief of Staff Diane
Thompson about “the urgency of the issue facing my client, Navistar” and urging
that “EPA leadership become involved in a certification matter today or
tomorrow, latest.”  (See Ex. O, 5-10-12 email Jones to Thompson)  Jones told
Thompson that an adverse decision from the EPA on certification would have
“major effects on the company’s labor force, suppliers, and dealers” and asked
Thompson and other senior EPA leadership to re-engage on the certification issue.
(Id.)
 The next day, Alston & Bird’s Dole emailed Valerie Jarrett, a senior adviser to
President Obama, with similar language to Jones’ email to Thompson from the

17

EPA.  (See Ex. K, 5-11-12 email Dole to Jarrett)  Dole told Jarrett that Navistar
was requesting “that EPA certify its heavy-duty engines to the .2 NOx standard
and “[w]e think it is essential that the EPA certification office have an appropriate
amount of involvement from leaders within the Administration.”  (Id.)
 A few days later, in May 2012, Bob Jones of Alston & Bird engaged in an email
exchange with another White House official, Michael Strautmanis, telling
Strautmanis that although “no adverse decision was rendered by EPA staff
yesterday,” the “need for a win-win resolution continues in earnest.”  (See Ex. P,
5-15-12 email Jones to Strautmanis)  Jones asked Strautmanis “whether there is
anything more that would be helpful to you and the Administration during the
consideration of this vital matter.”  (Id.)
 In June 2012, Alston & Bird’s Bill Anaya engaged in an email exchange with
Senator Durbin’s staff noting that a Navistar executive was “personally meeting
with [senior official] Margo Oge at the EPA on Monday to discuss the
certification issue.”  Anaya suggested that “perhaps Governor Quinn could touch
base with [then-EPA] Administrator Jackson and his staff could contact [EPA
official] Ms. [Margo] Oge.”  (See Ex. Q, 6-15-12 email Anaya to Souders)  Anaya
asked Senator Durbin’s staff whether “your office would be willing to ask
Governor Quinn’s team to engage in this way and also whether you and your staff
could also share a similar perspective with EPA.”  (Id.)
Charbonneau indicated in testimony that Navistar hired Alston & Bird as lobbyists for
Navistar.  (See Ex. D, 12-9-14 Charbonneau Test. at 40:5-40:16; 12-10-14 Charbonneau Test. at
408:14-409:13)  He also testified that Navistar had Alston & Bird “engage in the communication

18

of the level playing field on the certifications of [competitors’] SCR [engines] versus the
certifications of Navistar at .2 [NOx].”  (Id. at 50:7-15)  Charbonneau testified that Billy Tauzin
and Bill Anaya were Navistar’s main contacts at Alston & Bird.    (Id. at 50:20-22)  He testified
that Navistar had Alston & Bird reach out to politicians regarding the uneven playing field, in
Navistar’s view, surrounding the EPA’s treatment of Navistar versus its competitors.  (Id. at
51:6-12)
In mid-June 2012, Charbonneau engaged in an email exchange with Daniel Ustian,
Navistar’s then-CEO, and told Ustian “we will arrange a call for Friday with lobbyists.”  (Ex. R,
6-12-12 emails between Charbonneau and Ustian)  The next day, Charbonneau’s assistant
arranged for a call for that Friday with Alston & Bird – presumably among the “lobbyists”
Charbonneau had referred to in his email exchange with Ustian.  (Ex. S, 6-12-12 to 6-13-12
emails between Anaya, Davalos, and others)
In 2011 and 2012, Alston & Bird registered as a lobbyist for Navistar under the federal
Lobbying Disclosure Act of 1995 (“LDA”).  (See http://disclosures.house.gov/lc/lcsearch.aspx)
In the second and third quarters of 2012, Alston & Bird disclosed that it engaged in lobbying
Congress, the EPA, and the White House for Navistar on subject matters including “[i]ssues
related to domestic manufacturing activities & engine certification.”  (See Ex. T, Alston & Bird
Lobbying Reports for Q2 2012 and Q3 2012)  Alston & Bird’s lobbyist disclosure forms
identified Robert Jones, Bill Anaya, and Billy Tauzin as individual Alston & Bird lobbyists for
Navistar on these issues.  (Id.)
8. Navistar Also Retains Tyrone Fahner of Mayer Brown as a Lobbyist
In approximately 2012, Navistar retained Tyrone Fahner of the Mayer Brown firm.
Fahner is a former elected public official, having served as the Illinois Attorney General from

19

1980-1983.  Fahner remains politically active; for example, in recent years, he has served as the
chairman of the Illinois Republican Party’s Finance Committee and as the Illinois finance co-
chair and national fundraiser for Mitt Romney’s 2012 presidential campaign.  (See Ex. U, 9-7-08
Article Crain’s Chicago Business; Ex. V, 6-16-12 Article Chicago Sun-Times).
Sheahan testified that Fahner worked as a lobbyist for Navistar.  (See Ex. N, 6-6-14
Sheahan Test. at 32:21-33:3 (“Q: Who was responsible for communicating with the White House
regarding the .2 NOx certification effort from government relations?  A: The initial contact with
[Valerie] Jarrett I believe occurred through Ty Fahner, who was a lawyer and a lobbyist at Mayer
Brown.  He was on the team as a contract lobbyist.”)).
Likewise, Charbonneau testified that he hired Fahner as a lobbyist to engage with
politicians or the EPA regarding Navistar’s 0.2 NOx certification application, though he
modified that testimony after his attorneys prompted him to do so.   (See Ex. D, 12-9-14
Charbonneau Test. at 40:23-42:8; 12-10-14 Charbonneau Test. at 408:14-409:13)  He also
testified that “Ty Fahner arranged and engaged with us at the EPA with a meeting with [current
EPA Administrator and then-Assistant EPA Administrator] Gina McCarthy and some members
of her staff” regarding EPA certification.  (Id. at 46:23-48:11)
Consistent with Charbonneau’s testimony, one of the few substantive documents that
Navistar has produced regarding Fahner indicates that Fahner was engaged in lobbying on behalf
of Navistar.  In the document, an email from Charbonneau to Troy Clarke, Navistar’s current
CEO, Charbonneau recounted a January 23, 2012 meeting involving Fahner and Navistar
executives and EPA officials.  (See Ex. W, 6-27-12 email Charbonneau to Clarke)  In this email,
Charbonneau told Clarke that the meeting had been cordial and that “I believe our political
pressure through Valerie Jarrett to EPA Administrator to Gina [McCarthy] helped make this

20

conversation more positive.”  (Id.)  Documents listed on Mayer Brown’s privilege log with dates
prior to January 23, 2012 describe Fahner’s “communications with the White House” over EPA-
related issues (see Mayer Brown Privilege Log Entry Nos. 102-103, 82-83), suggesting that
Fahner was part of Navistar’s effort to put “political pressure” on the EPA through the White
House.  Indeed, Charbonneau testified that Fahner communicated with Jarrett regarding
“leveling the playing field” in terms of the EPA’s treatment of Navistar versus its treatment of
Navistar’s competitors.  (Ex. D, 12-10-14 Charbonneau Test. at 252:13-254:8)
Further, most of the document descriptions drafted by Navistar in Mayer Brown’s
privilege log suggest that the withheld documents relate to lobbying activities, not providing
legal advice.  Many of these descriptions state that the withheld documents are communications
regarding “the status of communications with the White House,” (e.g., Mayer Brown Privilege
Log Entry Nos. 57, 102-03), the “status of discussions with the EPA” (id. at Entry Nos. 8-16),
the “status of discussions with the EPA and the White House” (id. at Entry Nos. 26-29), or “the
status of discussions with Senator Durbin’s Office and the White House.”  (Id. at Entry Nos. 30,
32)  These descriptions indicate Fahner’s involvement in lobbying public officials to pressure the
EPA to issue a Certificate to Navistar, not involvement predominately in legal work.
9. Navistar Shifts Its Strategy to Adopt SCR Technology
Navistar’s lobbying efforts relating to engine certification ultimately were unsuccessful.
The EPA did not give Navistar a Certificate for the 0.2 NOx standard in response to any of
Navistar’s applications using its EGR-only technology.
In July 2012, Navistar announced a change to its emissions strategy, stating that it would
begin using SCR technology as part of its emissions strategy and that it was withdrawing its
application pending before the EPA for certification of a 0.2 NOx engine using EGR-only

21

technology.  In 2013, Navistar obtained an EPA Certificate for a 0.2 NOx engine that relied in
part on SCR technology, some of which it had purchased from one of Navistar’s competitors.

II. ARGUMENT
Navistar’s improper privilege claims are impacting the SEC staff’s investigation to
determine what, if any, violations of the securities laws have occurred.  Therefore, the SEC now
asks this Court to compel Navistar to produce documents that Navistar improperly has redacted
and withheld as privileged.
A. This Court is Empowered to Grant the Relief Sought
As a threshold matter, it is well-established that this Court has jurisdiction and the
authority to compel Navistar to comply with the SEC’s subpoenas.  Section 22(b) of the
Securities Act and Section 21(c) of the Exchange Act give district courts jurisdiction over
subpoena enforcement actions.  See 15 U.S.C. § 77v(b); 15 U.S.C. § 78u(c).  The SEC is
permitted to commence subpoena enforcement actions upon application in any jurisdiction.
7

Courts have previously awarded relief to the SEC in subpoena enforcement actions in a variety of
contexts, see, e.g., SEC v. Shanahan, 504 F. Supp. 2d 680 (E.D. Mo. 2007) (subpoena
enforcement action to compel respondent to either produce documents and testify or assert the
Fifth Amendment privilege), including a subpoena enforcement action brought to compel

7
 Although this subpoena enforcement action concerns non-parties ASGK, Alston & Bird, Mayer Brown,
and Williams & Jensen, in addition to Navistar, the SEC and Navistar are the only necessary parties to
this action.  Navistar has asserted control over these non-parties’ privilege claims by deciding which
documents from these productions would be redacted or withheld as privileged.  See DeGeer v. Gillis,
755 F. Supp. 2d 909, 924 (N.D. Ill. 2010) (client had control over law firm’s database); Ivy Hotel San
Diego, LLC v. Houston Casualty Co., 2011 WL 4914941 at *9-*10 (S.D. Cal. 2011) (client had control of
law firm’s client files); Cf. Hobley v. Burge, 433 F.3d 946 (7
th
 Cir. 2006) (noting that law firm had
independent privacy interest in work product documents where client had not attempted to exercise
control over privilege claims).  Conversely, these non-parties have ceded any control they might
otherwise have had over privilege claims by permitting Navistar to determine the documents over which
privilege claims would be asserted.

22

production of documents withheld on the basis of the attorney-client privilege and work product
doctrine.  See SEC v. Chesnoff, 2006 WL 2052371 (N.D. Tex. July 18, 2006).
B. The Attorney-Client Privilege and Work Product Doctrine  Are Narrowly
Construed

Because  documents  and  information  that  are  redacted  and  withheld  on  the  basis  of  the
attorney-client  privilege  and  work  product  doctrine  are  “in  derogation  of  the  search  for  the
truth,”  courts  narrowly  construe  the  privilege.    U.S.  v  Evans,  113  F.3d  1457,  1461  (7th  Cir.
1997); see  also  Allendale  Mut.  Ins.  Co.  v.  Bull  Data  Sys.,  Inc.,  152  F.R.D.  132,  135  (N.D.  Ill.
1993) (“As the attorney-client and work product privileges obscure the search for the truth, they
are both narrowly construed by courts...”); McCook Metals L.L.C. v. Alcoa Inc., 192 F.R.D. 242,
260 (N.D. Ill. 2000) (“Like the attorney-client privilege, the work product doctrine significantly
restricts the scope of discovery and must be narrowly construed in order to aid in the search for
truth.”).  As the party seeking to assert the privileges, Navistar bears the burden of establishing
“all  the  essential  elements”  of  each  privilege  claim,  and  it  must  do  so  on  a  “question-by-
question” or “document-by-document” basis.  U.S. v. White, 950 F.2d 426, 430 (7th Cir. 1991);
Sprecher  v.  Graber,  716  F.2d  968,  973  (2
d
  Cir.  1983)  (stating  that  respondent  in  SEC
enforcement action bears the burden of proving the applicability of the privilege).
C. The Attorney-Client Privilege Only Applies to Communications Necessary for
the Giving or Seeking of Legal Advice

 As one court in this District recently stated:
It  cannot  be  too  strongly  emphasized  that  the  lawyer-client  relationship,
itself,  ‘does  not  create  a  cloak  of  protection  which  is  draped  around  all
occurrences and conversations which have any bearing, direct or indirect,
upon  the  relationship  of  the  attorney  with  his  client.’    In  re  Carl  Walsh,
623  F.2d  489,  494  (7
th
  Cir.  1980).    Thus,  merely  communicating  with  a
lawyer    or    copying    a    lawyer    on    an    otherwise    non-privileged
communication, will not transform the non-privileged communications or
attachment into a privileged one.  And that is so even if the otherwise non-

23

privileged communication was at the behest of a lawyer.

Lee  v.  Chicago  Youth  Centers,  2014  WL  2618537  at  *  4  (N.D.  Ill.  June  10,  2014)  (citation
omitted); accord Kleen Prods. v. Int’l Paper, 2014 WL 6475558 at *2 (N.D. Ill. Nov. 12, 2014)
(rejecting privilege claims over certain documents involving attorneys and noting that “many of
the  exemplar  documents  that  were  provided  to  the  Court  contain  no  legal  advice  at  all”  even
where an attorney was a recipient of the document).
  With  respect  to  attorney-client  communications,  the  attorney-client  privilege  “protects
only  those  disclosures  necessary  to  obtain  informed  legal  advice  which  might  not  have  been
made  absent  the  privilege,”  In  re  Carl  Walsh,  623  F.2d  489,  494  (7
th
  Cir.  1980).    For  the
attorney-client  privilege  to  apply,  the  legal  advice  must  be  the  “predominant  element”  in  the
communication, and the privilege does not apply “where the legal advice is incidental to business
advice.”  Allendale, 152 F.R.D. at 137; see also Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577, 582
(7th Cir. 1981) (“Only where the document is primarily concerned with legal assistance does it
come  within  [the  attorney-client  and/or  work-product]  privileges;  technical  information  is
otherwise discoverable.”).
D. The Work Product Doctrine Only Applies to Documents Created Because of the
Prospect of Litigation

 In the Seventh Circuit, the test to determine whether materials are protected by the work
product  doctrine  is  “whether,  in  light  of  the  nature  of  the  document  and  the  factual  situation  in
the particular case, the documents can fairly be said to have been prepared or obtained because
of  the  prospect  of  litigation.”    Binks  Manufacturing  Co.  v.  Nat’l  Presto  Indus.,  709  F.2d  1109,
1119  (7
th
  Cir,  1983).    For  work  product  protection  to  apply,  the  “primary  motivating  purpose”
behind  a  document’s  creation  must  be  to  aid  in  pending  or  future  litigation.    See  Rawat  v.
Navistar  Int’l  Corp.,  2010  WL  1417840  at  *7-*8  (N.D.  Ill.  Apr.  7,  2010)  (holding  that  in

24

connection  with  a  different  matter,  Navistar  improperly  asserted  work  product  doctrine  over
withheld documents).  Further, “the mere fact that litigation does eventually ensue does not, by
itself, cloak materials prepared by an attorney with the protection of the work product privilege;
the privilege is not that broad.”  Binks, 709 F.2d at 1118.  Even “a plethora of pending law suits
as  well  as  on-going  law  suits”  is  not  substantial  enough  to  establish  that  documents  were
prepared in anticipation of litigation and protected by the work product doctrine.  In re Bank One
Secur. Litig., 209 F.R.D. 418, 425-26) (N.D. Ill. 2002) (documents prepared by bank as the result
of a government inquiry arose from the evolution of the bank’s business activities and were not
protected by the work product doctrine.)
E. Navistar Improperly Has Asserted Privilege Over the Lobbying and/or
Communications Firms’ Documents

The SEC challenges Navistar’s assertion of privilege over each of the documents listed
on the Lobbying and Communications Firms’ privilege logs, as well as documents on  Navistar’s
own privilege logs relating to communications with these firms.  (See Entry Nos. 44-45, 55-67
on Navistar’s 11/5/14 Privilege Log of Withheld Documents; Entry Nos. 1-3, 12, 14-15 of
Navistar’s 11/10/14 Privilege Log of Redacted Documents).  The SEC requests that the Court
order Navistar to provide the Court with all non-duplicative copies of all of these documents in
unredacted form for the Court’s in camera review, and, for redacted documents, to indicate to the
Court what portion of each document has been redacted as privileged.  The Court should then
conclude that these documents are non-privileged and order Navistar to produce them.

1. Neither the Attorney-Client Privilege Nor Work Product Doctrine Applies to
Communications Involving Public Affairs and Communications Consultant
ASGK

In response to the SEC’s subpoena to ASGK, Navistar has redacted portions of 88

25

documents
8
 and entirely withheld an additional 75 documents on privilege grounds.
Additionally,  Navistar withheld 7 documents in response to the SEC’s subpoena to Mayer
Brown involving communications with ASGK that ASGK did not produce in response to the
SEC’s subpoena and that were not listed on ASGK’s privilege log.  (See Mayer Brown LLP
Privilege Log Entry Nos. 51-54, 175, 184, 190)  Navistar has asserted both the attorney-client
privilege and the work product doctrine as to most of the communications involving ASGK, and
Navistar has asserted just the work product doctrine as to the remainder.
There is no privilege that applies to documents involving ASGK.
a. Communications Including ASGK Neither Involve The Giving or Seeking
of Legal Advice Nor Were Created in Anticipation of Litigation

First, because ASGK was acting in a public affairs and communications consulting
capacity for Navistar, not in a legal capacity, any communications including ASGK do not
involve the seeking or giving of legal advice to Navistar.  Accordingly, the attorney-privilege
does not apply.  See, e.g., McNamee v. Clemens, 2013 WL 6572899 at *5-*7 (E.D.N.Y. Sept. 18,
2013) (communications involving public relations firm and sports agency were not necessary for
attorney to provide legal advice, and, therefore, were not protected by attorney-client privilege);
In re Prograf Antitrust Litig., 2013 WL 1868227 at *2-*3 (D. Mass. May 3, 2013)
(communications between company or its outside counsel and public relations firm were not
covered by attorney-client privilege); LG Electronics U.S.A., Inc. v. Whirlpool Corp., 661 F.
Supp. 2d 958, 967 (N.D.Ill. 2009) (attorney-client privilege did not apply to communications
involving third-party advertising agencies); Flagstar Bank  v. Freestar Bank, 2009 WL 2706965
at *5-*6 (N.D. Ill. Aug. 25, 2009) (communications involving firm providing branding and
marketing services were not covered by attorney-client privilege).

8
 Most of these documents are different copies of a single email that Navistar has redacted, contained in
various email strings in the electronic mailboxes of various ASGK custodians.

26

Likewise, communications involving a public affairs and communications consultant
such as ASGK were not prepared in anticipation of litigation, and therefore the work product
doctrine is inapplicable to such communications.  See McNamee, 2013 WL 6572899 at *8 (work
product doctrine did not apply to communications that dealt with strategizing about effects of
litigation on the media or public generally, as opposed to strategizing about conduct of litigation
itself); Prograf, 2013 WL 1868227 at *3 (communications involving public relations firms were
not work product);  LG Electronics, 661 F. Supp. 2d at 967 n.3 (work product doctrine did not
protect communications with third-party advertising agencies where the communications did not
refer to on-going litigation and did not constitute documents prepared in anticipation of
litigation).
As an example of Navistar’s improper privilege assertions over documents responsive to
the SEC’s subpoena to ASGK, Navistar asserted both the attorney-client privilege and work
product doctrine over a portion of a document that ASGK simultaneously produced in redacted
and unredacted form.
9
  Navistar redacted as privileged the portion of a May 17, 2012 email from
ASGK employee Kathleen Cantillon to several ASGK, Navistar, and other non-attorneys entitled
“Next Steps” in which Cantillon stated that Navistar media relations employee Karen Denning
would reach out to Navistar lawyer Laurence Levine (who at all relevant times has worked for
Navistar under a full-time retainer agreement) about a certain topic.  (ASGK-NAV-E-00003568)
(part of Entry 43 on Navistar’s Redacted Documents ASGK Privilege Log).
10
  Because Navistar
did not retain third-party ASGK to facilitate the giving or seeking of legal advice or to assist with

9
 The SEC staff alerted Navistar’s counsel after discovering the unredacted versions of this document in
ASGK’s production, and Navistar’s counsel responded by asserting that the unredacted versions were
privileged and inadvertently produced.
10
 The SEC is not discussing the content of the redacted portion in further detail in this memorandum
because of Navistar’s claim of privilege.  But the document is part of the group of documents that the
SEC is requesting the Court review in camera and then order Navistar to produce in unredacted form.

27

litigation strategy, ASGK’s discussion of what Denning was planning to discuss with Levine is
not protected by either the attorney-client privilege or work product doctrine.  Further, the
content of the redacted portion of the email is nothing more than a description of the general
subject matter of a planned consultation with an attorney, which is not privileged.  See, e.g.,
Knox Energy v. Gasco Drilling, 2014 WL 4052806 at *3 (W.D. Va. Aug. 14, 2014) (“The
overwhelming authority from around the country is that the subject matter of an attorney-client
communication is not privileged.”); In re Mortgage Store, 509 B.R. 292, 299 (Bankr. D. Haw.
2014) (“Most of the redacted information describes the general subject matter of a
communication.  This is not privileged and must usually be revealed in a privilege log.”)
b. Navistar Waived Any Privileges on Documents in Which It Included
ASGK as a Third-Party Participant

Second, if Navistar included ASGK on communications that otherwise would be
privileged, Navistar waived the privileges by including ASGK as a participant.  See, e.g., Hill v.
State Street Corp., 2013 WL 6909524 at *3-*5 (D. Mass. Dec. 30, 2013) (company waived
attorney-client privilege where documents were shared with investment and governance
consultant); BSP Software v. Motio, 2013 WL 3456870 at *2-*5 (N.D. Ill. July 9, 2013)
(company waived attorney-client privilege over emails which company disclosed to third-party
advisory board); Jackson v. Deen, 2013 WL 1911445 at *10-*13 (S.D. Ga. May 8, 2013)
(defendants waived claims of attorney-client privilege and work product doctrine over
documents shared with agent and business adviser, business consultant, and marketing and
public relations firm).
Assuming arguendo that Navistar did not waive any applicable privileges by including
ASGK the firm in communications, Navistar waived the privilege over communications in which
Navistar widely disseminated the communications to ASGK employees.  (E.g., ASGK Redacted

28

Documents Privilege Log Entry Nos. 2, 49, 52 (emails from Navistar to seven ASGK
employees)).  A company waives privilege by disclosing documents to employees whose access
to them is unrelated to the purposes underlying the privilege.  See, e.g., PSK v. Hicklin, 2010 WL
2541795 at *4-*5 (N.D. Iowa June 22, 2010) (company waived privilege by including several
employees in communications in addition to attorney); ePlus, Inc. v. Lawson Software, 280
F.R.D. 247, 257 (E.D. Va. 2012) (waiver of attorney-client privilege over 8 documents
distributed to ten non-attorneys); Traficante v. Homeq Servicing Corp., 2010 WL 3167435 at *2
(W.D. Pa. Aug. 10, 2010) (waiver of privilege where company gave access to low level
employees); accord Baxter Travenol Labs. v. Abbott Labs., 1987 WL 12919 at *5 (N.D. Ill. June
19, 1987).
c. Communications Involving Only Non-Attorney ASGK Employees
Presumptively Are Non-Privileged

Finally, with respect to the majority of communications on Navistar’s ASGK privilege
logs, no privilege attaches to the communications because no attorneys were involved in the
communications.  Of the 88 entries on the ASGK Redacted Documents Privilege Log, 86 of
those entries relate to communications involving only non-attorneys,
11
 and of the 75 entries on
ASGK Withheld Documents Privilege Log, 58 of those entries relate to communications
involving only non-attorneys.
“A communication between non-lawyers is generally not protected under the attorney-
client privilege unless the ‘dominant intent is to prepare the information in order to get legal
advice from the lawyer.’”  In re Behr Dayton Thermal Prods., 298 F.R.D. 369, 375 (S.D. Ohio
2013) (quoting Comtide Holdings, LLC v. Booth Creek Mgmt. Corp., 2010 WL 5014483 at *2-

11
 As noted above, most of these 88 documents are different copies of a single email that Navistar has
redacted, contained in various email strings in the electronic mailboxes of various ASGK custodians.

29

*3 (S.D. Ohio Dec. 3, 2010)).  Although there may exist a “rare occasion that attorney-client
protection may be established without direct attorney communication”, Black & Veatch Corp. v.
Aspen Ins. (UK) Ltd., 297 F.R.D. 611, 620-621 (D. Kan. 2014), “substantial proof” is required to
show that a communication between non-lawyers is privileged.  Behr, 298 F.R.D. at 375; cf.
Wierciszewski v. Granite City Illinois Hosp. Co., 2011 WL 5374114 at *1-*2 (S.D. Ill. Nov. 7,
2011) (emails between employee of company and his supervisor regarding investigation of and
determination to ultimately terminate the plaintiff’s employment were non-privileged).
Likewise, the fact that a communication involved only non-lawyers weighs against a
finding of work product protection.  Cf. In re Chase Bank USA, N.A. Check Loan Contract Litig.,
2011 WL 3268091 at *5 (N.D. Cal. July 28, 2011) (holding that neither attorney-client privilege
nor work product doctrine applied to communication between non-attorneys).
In this case, there is nothing to indicate that Navistar properly has asserted privilege over
any of the over 140 communications among non-attorneys that Navistar has either redacted or
withheld as privileged in response to the SEC’s subpoena to ASGK.  Navistar engaged ASGK as
a public affairs and communications consultant to help Navistar pressure the EPA to certify a
Navistar engine at 0.2 NOx and to deal with the fallout if Navistar was unsuccessful in obtaining
a Certificate.  Navistar did not use ASGK to seek or receive legal advice or to develop a
litigation strategy.  Therefore, communications among ASGK employees (none of whom are
attorneys), or between non-attorney Navistar employees and ASGK, are subject to the general
presumption that communications among only non-attorneys are non-privileged.
2. Communications Involving Lobbying Firm Alston & Bird Are Not Privileged
a. Alston & Bird Provided Lobbying Services, Not Legal Services, To
Navistar

Navistar has withheld 316 documents as privileged in response to the SEC’s subpoena to

30

Alston & Bird, asserting that Alston & Bird was providing legal advice to Navistar.  But Alston
& Bird functioned as a lobbying firm for Navistar, not a law firm.
The term “lobbyist” is defined under federal law.  The LDA defines a “lobbyist” as any
individual who (with exceptions) is “employed or retained by a client” for services that include
making “lobbying contact[s].”  2 U.S.C. § 1602(10); see Nat’l Ass’n of Manufacturers v. Taylor,
582 F.3d 1, 7 n.2 (D.C. Cir. 2009).  The LDA defines a “lobbying contact” as (with exceptions) a
communication to a covered legislative or executive branch official with regard to the
“formulation, modification, or adoption” of, among other things, federal legislation, regulations,
or policies.  Id. at § 1602(8)(A); Taylor, 582 F.3d at 7 n.2.  “Lobbying activities” under the LDA
are defined as “lobbying contacts and efforts in support of such contacts, including preparation
and planning activities, research and other background work that is intended, at the time it is
performed, for use in contacts, and coordination with the lobbying activities of others.”  Id. at §
1602(7); Taylor, 582 F.3d at 7 n.2.
Alston & Bird provided lobbying services for Navistar.  The non-privileged documents
that Alston & Bird produced in response to the SEC’s subpoena show that the firm made
contacts with various public officials to encourage those officials to influence the EPA to issue a
Certificate to Navistar.  This is a quintessential lobbying activity under the definition of
“lobbyist” in the LDA and under any common-sense notion of what a lobbyist does.  The fact
that Alston & Bird and three of its partners registered as lobbyists under the LDA for this work
for Navistar confirms that Alston & Bird considered itself to be doing lobbying work for
Navistar.  Moreover, both lawyers and non-lawyers at Alston & Bird performed this work,
underscoring that Alston & Bird’s work for Navistar was not legal in nature.
b. Communications or Notes Involving Alston & Bird, Acting as a
Lobbying Firm, Are Not Privileged

31

Because Alston & Bird performed lobbying work for Navistar, not legal work,
communications involving Alston & Bird are protected by neither the attorney-client privilege
nor the work product doctrine.  These privileges are not implicated when a law firm or a lawyer
performs lobbying services to a client.  See, e.g., A&R Body Specialty and Collision Works v.
Progressive Casualty Ins. Co., 2014 WL 657688 at *3 (D. Conn. Feb. 20, 2014) (emails from
lobbyist-attorney to clients “are not protected by the attorney-client privilege as they do not
provide analysis or interpretation of legislation, and are more in the nature of general lobbying
activity updates”); In re Application of Chevron Corp., 749 F. Supp. 2d 141, 165-66 (S.D.N.Y.
2010) (neither attorney-client nor work product privilege applies to a activities relating to
lobbying, media and public relations, and political activism); In re Bisphenol-A (BPA)
Polycarbonate Plastic Prods. Liab. Litig., 2011 WL 1136440 at *3 (W.D. Mo. Mar. 25. 2011)
(“JPMA asserts the privilege with respect to advice regarding lobbying, public relations, dealing
with the media, and other non-privileged matters.  Advice on these topics is not privileged, even
if the advice comes from an attorney.”); cf. Evans v. City of Chicago, 231 F.R.D. 302, 312 (N.D.
Ill. 2005) (documents concerning advice on political, strategic, or policy issues not privileged)
(citing In re Lindsey, 148 F.3d 1100, 1106 (D.C. Cir. 1998)).
In discussions with the SEC staff, Navistar has asserted that Alston & Bird’s engagement
letter with Navistar (which Navistar improperly has redacted)
12
 confirms that Alston & Bird
provided legal services to Navistar.  But “an engagement letter cannot reclassify non-privileged
communications as ‘legal services’ in order to invoke the attorney-client privilege”.  Sandra T.E.
v. South Berwyn School District 100, 600 F.3d 612, 620 (7
th
 Cir. 2010) (citing Burden-Meeks v.

12
 See, e.g., U.S. v. Hatfield, 2009 WL 3806300 at *12 (E.D.N.Y. Nov. 13, 2009) (law firm engagement
letters are not privileged; Newmarkets Partners LLC v. Sal. Oppenheim Jr. & Cie. S.C.A., 258 F.R.D. 95,
103 (S.D.N.Y. 2009) (same).

32

Welch, 319 F.3d 897, 899 (7
th
 Cir. 2003)).  Indeed, courts that have considered whether attorneys
are acting in a lobbying capacity versus a legal capacity have analyzed the issue without regard
to what engagement letters may have said.  See, e.g., A&R Body, 2014 WL 657688 at *3 (no
mention of engagement letter in analysis); Chevron, 749 F. Supp. 2d at 165-66 (same).  Thus, the
engagement letter has little relevance where other evidence establishes that Alston & Bird acted
in a lobbying capacity for Navistar, not a legal capacity.
13

Alston & Bird’s communications with Navistar – many of which involve the “status of
communications with the EPA and the administration” and the like (see, e.g., Alston & Bird
Privilege Log Entry Nos. 4-9, 20-21, 35-39, 46-57) – are precisely the sorts of communications
that courts have held not be privileged because the communications relate to lobbying activities,
not legal activities.  This Court should adopt the reasoning in prior cases involving lawyer-
lobbyists and hold that communications involving Alston & Bird are not privileged.
c. Even Assuming That Alston & Bird Was Acting as a Law Firm, Not
All Communications With Alston & Bird Are Privileged

Even if Alston & Bird was acting as a law firm, rather than a lobbying firm, this does not
mean that every substantive communication involving Navistar and Alston & Bird is privileged.
Communications involving Navistar and Alston & Bird such as updates on the status of
Navistar’s discussions with the EPA are non-privileged, even if the Court were to find that
Alston & Bird acted in a legal capacity for Navistar.  These communications, many of which
Navistar engaged in with both lawyers and non-lawyers, and with law firms and non-law firms,

13
 Although the Seventh Circuit stated in Sandra T.E. that the engagement letter “should have been the
most important piece of evidence” in that case, Sandra T.E., 600 F.3d at 619, that case was “very fact-
specific.”  See Wartell v. Purdue Univ., 2014 WL 4261205 at *7 (N.D. Ind. Aug. 28, 2014)
(distinguishing Sandra T.E.).  Among other things, Sandra T.E. had nothing to do with whether attorneys
acted in a lobbying capacity or a legal capacity, which is one of the key questions here.  Instead, Sandra
T.E. involved a law firm’s assertion of privilege over its notes and internal memoranda relating to its
internal investigation of claims that an elementary school teacher sexually abused students.

33

are not communications necessary for Navistar to obtain informed legal advice or to assist in
developing litigation strategy.  There is no legal advice sought or obtained in such
communications.  They do not discuss litigation or litigation strategy.  Therefore, even assuming
that lawyers, acting in a legal capacity, are involved in the communications, the communications
are not privileged.  See e.g., Lee, 2014 WL 2618537 at *6-*8 (finding that certain substantive
communications between lawyer and client were non-privileged); Evans, 231 F.R.D. at 312-315
(same); U.S. ex. rel. Fields v. Sherman Health Sys., 2004 WL 905934 at *1-*2 (N.D. Ill. April
28, 2004) (same).
3. Communications or Notes Involving Lobbyist Tyrone Fahner of Mayer
Brown Are Not Privileged

 Navistar has withheld 193 documents as privileged in response to the SEC’s subpoena to
Mayer  Brown.    All  of  these  documents  are  communications  involving  Mayer  Brown  partner
Tyrone Fahner relating to Navistar or Fahner’s notes relating to Navistar.
 This Court should analyze the Mayer Brown documents in dispute in the same manner as
the  Alston  &  Bird  documents  and  conclude  that  none  of  the  Mayer  Brown  documents  are
privileged.  Like the Alston & Bird lawyers and non-lawyers who provided services to Navistar,
Mayer  Brown’s  Fahner  provided  lobbying  services,  not  legal  services,  to  Navistar.    The
descriptions of Fahner’s communications relating to Navistar on Mayer Brown’s privilege log –
such as communications “regarding the status of communications with the White House,” (e.g.,
Mayer  Brown  Privilege  Log  Entry  57,  102-03)  and  the  like  –  are  similar  to  the  descriptions  on
Alston  &  Bird’s  privilege  log.    These  entries  indicate  that,  like  Alston  &  Bird,  Mayer  Brown

34

acted as a lobbyist for Navistar to persuade EPA officials to issue a Certificate to Navistar and to
encourage other public officials to pressure the EPA to do so.
14

 The testimony of Navistar’s Director of Government Relations, Brien Sheahan, and Vice-
President  of  Government  Relations,  Patrick  Charbonneau,  as  well  as  the  non-privileged  email
communication discussing Fahner’s lobbying of EPA officials in or around January 2012, further
indicate that Mayer Brown and Fahner were acting as lobbyists for Navistar.  Conversely, there
is  nothing  to  indicate  that  Fahner  was  involved  in  developing  litigation  strategy,  analyzing
legislation,  or  otherwise  providing  legal  services  for  Navistar.    Because  Mayer  Brown  and
Fahner   performed   lobbying   services   for   Navistar,   not   legal   services,   none   of   Fahner’s
communications or notes are protected by the attorney-client privilege or work product doctrine.
 Further, even if Mayer Brown and Fahner were acting in a legal capacity for Navistar, not
all  attorney-client  communications  would  be  privileged  because  not  all  involved  the  giving  or
seeking or legal advice or the formulation of litigation strategy.  See Lee, 2014 WL 2618537 at
*6-*8; Evans, 231 F.R.D. at 312-315; Fields, 2004 WL 905934 at *1-*2; Allendale, 152 F.R.D.
at 137.
            Additionally,            assuming            arguendo  that  communications  with  Fahner  and  Navistar  are
privileged  in  the  first  instance,  no  privilege  applies  to  communications  that  were  disclosed  to
third-parties  such  as  ASGK  (see Mayer  Brown  LLP  Privilege  Log  Entry  Nos.  51-54,  175,  184,
190) and/or Alston & Bird (id. at Entry Nos. 1, 3-5, 7, 9-13 15-25, 27, 29, 31-36, 110, 131-139,
141, 144, 177, 179-80, 185-87, 191), or communications involving many other individuals unless

14
 Unlike Alston & Bird, Mayer Brown and Fahner do not appear to have registered as lobbyists for
Navistar.  But this is not dispositive.  First, the LDA does not require all lobbyists to register.   See 2
U.S.C. § 1602(10); Autor v. Pritzker, 740 F.3d 176, 179 (D.C. Cir. 2014).  Second, Mayer Brown and
Fahner may have failed to register.  Courts have found lawyers to have acted as lobbyists without
evidence that the lawyers registered as such.
 See, e.g., A&R Body, 2014 WL 657688 at *3; Chevron, 749
F. Supp. 2d at 165-66.

35

Navistar can show that each and every individual involved in the communication was necessary
for the giving or seeking of legal advice or formulation of litigation strategy.  (Id. at Entry Nos.
1, 3-5, 7, 9-13 15-25, 27, 29, 31-36, 79-80, 110, 119-20, 131-139, 141, 144, 177, 179-80, 185-87,
191).  The SEC incorporates by references its arguments in Sections II.E.1 to II.E.2 above with
regard to these points.
4. Communications  Involving  Lobbying  Firm  Williams  &  Jensen  Are  Not
Privileged

For  the  Williams  &  Jensen  production,  Navistar  has  asserted  privilege  over  seven
documents   that   Navistar   listed   on   a   privilege   log,   and   Navistar   asserted   privilege   over
approximately 31 additional documents that Navistar has not yet listed on a privilege log for the
Williams  &  Jensen  production.    As  with  Alston  &  Bird  and  Mayer  Brown,  Williams  &  Jensen
performed lobbying work for Navistar, not legal work.  Indeed, although Williams & Jensen is a
law  firm,  it  does  not  appear  that  any  Williams  &  Jensen  lawyers  performed  work  for  Navistar
relating  to  engine  certification  issues,  as  opposed  to  Williams  &  Jensen  non-lawyers  such  as
Beer.  Because Williams & Jensen was a lobbyist for Navistar, and because Navistar’s retention
of Williams & Jensen was not necessary for Navistar’s lawyers to communicate with Navistar or
develop  litigation  strategy,  communications  involving  Williams  &  Jensen  are  not  privileged.
This  Court  should  order  Navistar  to  produce  the  documents  that  Navistar  improperly  has
withheld as privileged from Williams & Jensen’s document production.
As examples of Navistar’s improper privilege assertions, Navistar asserted privilege over
several documents that Williams & Jensen produced but that Navistar clawed back after the SEC
staff  alerted  Navistar  based  on  the  listing  of  these  documents  on  other  parties’  privilege  logs.
The  documents  that  Navistar  clawed  back  as  privileged  mainly  consisted  of  updates  from
Charbonneau  on  the  status  of  Navistar’s  discussions  with  the  EPA  over  certification  issues.

36

(E.g., SEC-WandJ-E-0006858,   SEC-WandJ-E-0006896-97,   SEC-WandJ-E-0006862)      Even
assuming  that  Williams  &  Jensen  and  the  other  recipients  of  these  updates  from  Charbonneau
were  acting  in  a  legal  capacity  when  they  received  the  updates  –  which  they  were  not  –  these
status  updates  are  not  privileged.    See,  e.g.,  Digital  Vending  Services  Int’l  v.  The  University  of
Phoenix, 2013 WL 1560212 at *6 (E.D. Va. April 12, 2013) (“These communications are simply
status updates and no legal advice is given by counsel.  Therefore, these communications are not
privileged.”)
F. Navistar   Improperly   Has   Asserted   Privilege   Over   Internal   Navistar   Non-
Attorney Communications

  In  addition  to  improperly  asserting  privilege  over  communications  involving  lobbyists,
Navistar also has improperly asserted privilege over internal Navistar communications involving
only  non-attorneys,  including  non-attorney  notes.    Although  rare  occasions  may  exist  in  which
non-attorney  communications  are  privileged,  there  is  nothing  to  indicate  that  Navistar  has
asserted  a  valid  claim  of  privilege  over  the  thousands  of  communications  involving  non-
attorneys  listed  on  Navistar’s  privilege  logs.    See,  e.g., Behr,  298  F.R.D.  at  375  (holding  that
communications involving only non-attorneys were non-privileged); Black & Veatch, 297 F.R.D.
at    620-621    (occasions    in    which    attorney-client    protection    applies    to    non-attorney
communications  are  “rare”).    Even  if  an  attorney  is  referenced  in  these  communications,  the
communications may be non-privileged because, for example, the communications do not reveal
advice  received  or  sought  from  an  attorney,  or  the  advice  sought  or  received  from  an  attorney
constitutes predominately business or political advice rather than legal advice. See Lee, 2014 WL
2618537 at * 4; Evans, 231 F.R.D. at 312-315; Fields, 2004 WL 905934 at *1-*2;
  The  large  volume  of  non-attorney  communications  redacted  and  withheld  by  Navistar
makes it impractical for the Court to conduct an in camera review of all such documents.  The

37

SEC  is  requesting  that  the  Court  conduct  an  in  camera  review  of  a  subset  of  the  non-attorney
communications over which privilege disputes between Navistar and the SEC remain.  Although
the  SEC  is  not  requesting  that  the  Court  definitively  determine  the  validity  of  Navistar’s
privilege  claims  as  to  every  document  that  remains  in  dispute,  the  SEC  is  hopeful  that  with
respect  to  remaining  privilege  disputes,  Navistar  will  follow  the  Court’s  guidance  in  its
resolution  of  this  subpoena  enforcement  action.    By  asking  the  Court  to  conduct  an  in  camera
review of a subset of disputed non-attorney communications, the SEC is attempting to conserve
Court resources and obviate the need for further Court intervention with regard to other privilege
disputes between Navistar and the SEC.
15

  In  Exhibit  X  attached  hereto,  the  SEC  has  identified  the  non-attorney  communications
that it is requesting the Court review in camera and order Navistar to produce.
G. Navistar  Improperly  Has  Asserted  Privilege  Over  Draft  SEC  Filings  And
Communications Regarding Those Filings

1. Draft  SEC  Filings  or  Communications  Regarding  Those  Filings  Do  Not
Constitute Work Product

 Navistar  has  redacted  and  withheld  certain  draft  SEC  filings,  and  communications
regarding those filings, in response to the SEC’s subpoenas to Navistar.  For several of the draft
SEC filings, and communications regarding those filings, Navistar has invoked the work product
doctrine.
   Navistar’s   assertion   of   the   work   product   doctrine   over   draft   SEC   filings,   and
communications  regarding  those  filings,  is  inappropriate.    Navistar  did  not  prepare  draft  SEC

15
 Courts deciding privilege disputes sometimes articulate guidelines governing the court’s resolution of
the disputes.  See, e.g., Hill, 2013 WL 6909524 at *1 (“[t]he parties further agreed that they would use the
court’s guidance at argument and in this decision to govern their positions at the upcoming depositions”);
In re Vioxx Prods. Liab. Litig., 501 F. Supp. 2d. at 809 (“[I]n our assessment of [privilege] claims, we
established guidelines to ensure consistency in rulings for recurring types and formats of
communications.”)

38

filings, such as Forms 10-Q and 10-K, in anticipation of litigation; rather, Navistar prepared the
filings  because  SEC  disclosure  rules  required  a  public  company  such  as  Navistar  to  make  the
filings.    Because  Navistar  would  have  drafted  SEC  filings  regardless  of  threatened  or  actual
litigation, the work product doctrine is inapplicable to these drafts, or communications regarding
those  drafts.    See,  e.g.,  RBS  Citizens  v.  Husain,  291  F.R.D.  209,  220-21  (N.D.  Ill.  2013)
(spreadsheets  consisting  of  loan  risk  analyses  and  financial  forecasts  were  not  work  product);
Rawat, 2010 WL 1417840 at *8 (documents created by Navistar to ensure compliance with SEC
rules  and  regulations  were  not  work  product);  Resurrection  Healthcare  and  Factory  Mut.  Ins.
Co.  v.  GE  Health  Care,  2009  WL  691286  at  *2-*3  (N.D.  Ill.  Mar.  16,  2009)  (interviews,
statements,  and  documentation  regarding  spill  were  not  work  product);  Bank  One  Secur.  Litig.,
209  F.R.D.  at  425-26  (documents  created  as  a  result  of    regulatory  inquiry  were  not  work
product).
2. The Attorney-Client Privilege Does Not Protect the Draft SEC Filings
Redacted and Withheld by Navistar

  Draft  SEC  filings,  and  communications  regarding  those  filings,  that  Navistar  has
withheld  are  not  covered  by  the  attorney-client  privilege.    Courts  within  this  District  have  held
that draft SEC filings are not privileged.  In re JPMorgan Chase & Co. Secur. Litig., 2007 WL
2363311  at  *3  (N.D.  Ill.  Aug.  13,  2007)  (draft  SEC  filings  are  not  privileged);  Christman  v.
Brauvin Realty Advisors, Inc., 185 F.R.D. 251, 256 (N.D. Ill. 1999) (same); but see Roth v. Aon
Corp., 254 F.R.D. 538, 540-41 (N.D. Ill. 2009) (certain draft SEC filings can be privileged).
  Even  if  the  Court  holds  that,  as  a  general  matter,  certain  draft  SEC  filings  can  be
privileged,  Navistar’s  withholding  of  draft  SEC  filings,  and  communications  regarding  those
filings, from its productions in this investigation is improper.  First, some of the draft SEC filings
are  attached  to  communications  among  only  non-attorneys,  and  there  is  no  indication  that

39

Navistar    has    properly    asserted    the    attorney-client    privilege    over    such    non-attorney
communications.  (See Section II.F., supra).
  Second,  to  the  extent  communications  attaching  draft  SEC  filings  include  one  or  more
attorneys, the attorneys were among many recipients of those communications.  Where Navistar
distributed these draft filings widely to attorneys and non-attorneys, Navistar was not primarily
seeking  or  obtaining  legal  advice  in  distributing  the  filings.    See  United  Food  and  Commercial
Workers  Union  v.  Chesapeake  Energy  Corp.,  2012  WL  2370637  at  *10-*11  (W.D.  Okla.  June
22,  2012)  (“final  versions  of  publicly  disseminated  documents  which  were  distributed  to  the
attorney  as  well  as  other  corporate  officers  or  employees,  without  soliciting  legal  advice  or
comment  or  approval,  would  not  be  privileged.”);  Freeport-McMoran  Sulphur,  LLC  v.  Mike
Mullen  Energy  Equipment  Resource, Inc.,  2004  WL  1299042  at  *6-*7  (E.D.  La.  June  4,  2004)
(“[e]ven though the draft [press] release was forwarded to [an attorney] for review and comment,
the  document  was  also  forwarded  to  several  other  company  executives  and/or  employees  for
review  and  comment.”);  Cf.  In  re  Vioxx  Prod.  Liab.  Litig.,  501  F.  Supp.  2d  789,  809  (E.D.  La.
2007)   (communications   involving   both   attorneys   and   non-attorneys   are   not   privileged);
Preferred Care Partners Holding Corp. v. Humana, Inc., 258 F.R.D. 684, 689 (S.D. Fla. 2009)
(same); In  re  Avandia  Marketing,  Sales  Practices  and  Prod.  Liab.,  2009  WL  4807253  at  *4
(E.D.  Pa.  Oct.  2,  2009)  (document  sent  to  12  non-attorneys  and  1  attorney  was  not  privileged).
The  distribution  of  the  drafts  to  a  few  attorneys,  among  many  others,  does  not  make  the  drafts
privileged.  See Lee, 2014 WL 2618537 at *6-*7 (holding that certain communications between
an  attorney  and  client  were  not  privileged);  Evans,  231  F.R.D.  312-16  (same);  Kleen  Prods.,
2014 WL 6475558 at *1 (“courts in this District have held that ‘[w]here a document is prepared
for  simultaneous  review  by  legal  and  nonlegal  personnel  and  legal  and  business  advice  is

40

requested,  it  is  not  primarily  legal  in  nature  and  is  therefore  not  privileged.’”)  (quoting  RBS
Citizens, 291 F.R.D. at 216)).
  As  an  example  of  Navistar’s  improper  privilege  assertions  over  draft  SEC  filings,  and
communications regarding those filings, Navistar redacted as privileged a portion of a draft press
release  which  was  to  be  filed  with  the  SEC  and  accompany  Navistar’s  first  quarter  2012  Form
10-Q.    Navistar’s  Manager  of  External  Communications,  a  non-attorney,  circulated  the  draft
press  release  to  several  non-attorneys.  (See NAV00115614-NAV00115619  (to  be  submitted  to
the  Court  for  an  in  camera  review),  2-29-12  email  Koc  to  Klein,  Keele,  Miller,  Campbell;  see
also       NAV00115609-NAV00115612;       NAV00115620-NAV00115625;       NAV00129017-
NAV00129020).      In   response,   Navistar’s   Director   of   External   Reporting   and   Technical
Accounting,  Donald  Klein  (“Klein”)  another  non-attorney,  provided  comments  on  the  draft,
including  comments  on  draft  language  regarding  Navistar’s  submission  to  the  EPA  to  obtain  a
Certificate for an engine that met the 0.2 NOx standard.  In Klein’s comments, he stated a need
for   legal   input   on   certain   portions   of   the   draft,   including   portions   regarding   Navistar’s
submission to the EPA.  Navistar has claimed privilege over all of Klein’s comments relating to
Navistar’s submission to the EPA.  (Id.)
16

 Navistar’s  redactions  of  Klein’s  comments  on  this  draft  press  release  are  improper.
Klein’s comments are not privileged.  Rather, they are non-privileged comments from one non-
attorney  to  other  non-attorneys  on  the  contents  of  a  draft  press  release.    Klein’s  statement  of  a
need  for  legal  input  does  not  change  the  analysis.    This  statement  does  not  disclose  the  actual

16
 Navistar simultaneously produced this document both in redacted and unredacted form.  In a privilege
log, Navistar asserted both the attorney-client privilege and the work product doctrine over a redacted
version of the document.  (See 9-20-12 Redacted Documents Privilege Log, p. 10, NAV00016666-
NAV00016668) (erroneously stating a 2011 date).  After the SEC staff alerted Navistar’s counsel about
the unredacted versions of this document in Navistar’s production, Navistar asserted the attorney-client
privilege over portions of the unredacted versions of the document.

41

content  of  a  confidential  attorney-client  communication.    Indeed,  there  is  no  evidence  that  any
attorney-client  communication  about  Klein’s  comments  ever  occurred.    This  Court  should  rule
that  Klein’s  comments  on  the  draft  press  release  are  not  privileged.    See  Smithkline  Beecham
Corp. v. Apotex Corp., 193 F.R.D. 530, 538 (N.D. Ill. 2000) (communications between non-legal
advisors were not privileged).
 The draft SEC filings redacted and withheld by Navistar, and communications regarding
those  filings,  that  Navistar  has  redacted  and  withheld,  and  that  the  SEC  is  requesting  that  this
Court  review  in  camera  and  order  Navistar  to  produce  are:  (a)  Entry  on  Navistar  11-5-14
Privilege  Log:  Entry  No.  37,  pp.  49-50,  NAVPRIV00006787-NAVPRIV00006791;  (b)  Entries
on Navistar 1-19-15 Privilege Log: Entry No. 2, p, 1, NAV00115609-NAV00115612; Entry No.
3,  page  1,  NAV00115614-NAV00115619;  Entry  No.  4,  p.  1,  NAV00115620-NAV00115625;
and  Entry  No.  5,  p.  2,  NAV00129017-NAV00129020;  and  (c)  NAV00707022-NAV00707135
and NAV00707136-NAV00707220 (as to which Navistar has not yet listed on a privilege log but
has stated it intends to do so).
  While  these  documents  appear  to  be  the  only  draft  SEC  filings,  or  communications
regarding those filings, that currently remain in dispute between the SEC and Navistar, it appears
that  the  parties  may  continue  to  have  disputes  about  over  SEC  filings,  or  communications
regarding  those  filings.    It  appears  that  Navistar  has  not  yet  produced  or  not  yet  listed  on  a
privilege log certain drafts of SEC filings that the SEC is seeking as part of its investigation.  But
the  SEC  is  hopeful  that  with  respect  to  possible  remaining  privilege  disputes  over  draft  SEC
filings, and communications regarding those filings, Navistar will follow the Court’s guidance in
its  resolution  of  this  subpoena  enforcement  action  so  as  to  obviate  the  need  for  future  Court
intervention.

42

CONCLUSION
 For the foregoing reasons, the SEC respectfully requests that the Court grants its First
Amended Application, conduct an in camera review of the documents identified in this First
Amended Application and the SEC’s Memorandum in Support, order Navistar to produce the
documents that Navistar improperly has redacted or withheld as privileged, and award such other
and further relief as this Court deems just.

Dated:            January            22,            2015                                                Respectfully            submitted,

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

/s/ Eric M. Phillips
____________________________________
                                                                                    By:            One            of            its            Attorneys

Eric M. Phillips (IL Bar No. 6237871)
Amy Flaherty Hartman (IL Bar No. 6274926)
Anne Graber Blazek (IL Bar No. 6282987)
United States Securities and Exchange Commission
175 West Jackson Boulevard
Ninth Floor
Chicago, Illinois 60604
Telephone:  (312) 353-7390

CERTIFICATE OF SERVICE

 I, Eric M. Phillips, an attorney, being duly sworn, state on oath that on January 22, 2015,
I caused the Securities and Exchange Commission’s Memorandum of Law in Support of Its First
Amended Application for an Order Compelling Compliance with Administrative Subpoenas to
be served upon the following counsel by the Court’s CM/ECF system:
Sean M. Berkowitz
Robin M. Hulshizer
John J. Sikora, Jr.
Latham & Watkins LLP
330 North Wabash Ave., Suite 2800
Chicago, IL 60611

                                                                                    /s/            Eric            M.            Phillips_______________
  Eric M. Phillips

IN THE UNITED STATES DISTRICT COURT  
FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 
 

__________________________________________ 
       ) 
UNITED STATES SECURITIES AND   ) 
EXCHANGE COMMISSION,   ) 
       )      

Applicant, )  Civil Action No. 14-cv-10163 
 )  

v.    ) 
 )  Hon. John Z. Lee 
NAVISTAR INTERNATIONAL CORP.,  )  Hon. Mag. Judge Susan E. Cox 

    ) 
Respondent.   ) 

__________________________________________ ) 
 

 
 
 

MEMORANDUM IN SUPPORT OF SECURITIES AND EXCHANGE COMMISSION’S 
FIRST AMENDED APPLICATION FOR AN ORDER COMPELLING COMPLIANCE 

WITH ADMINISTRATIVE SUBPOENAS 
 
 
 

  Eric M. Phillips 
 Amy Flaherty Hartman 
 Anne Graber Blazek 
 U.S. SECURITIES AND EXCHANGE     

 COMMISSION  
 175 W. Jackson Blvd., Suite 900 
 Chicago, IL 60604 
 Telephone: (312) 353-7390 
 Fax: (312) 353-7398 
      
Attorneys for Plaintiff United States Securities 
and Exchange Commission 

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i 
 

TABLE OF CONTENTS 

INTRODUCTION…………………………………………………………………….....1 

I.  FACTS……………………………………………………………..………………....4 

A. The SEC’s Investigation…………………………………………………….4 

B. Navistar’s Responses to the SEC’s Subpoenas and Its Privilege Claims…...4 
 

1. Navistar’s Privilege Claims Over Communications Involving Only 
Non-Attorneys………………………………………………………5 
 

2. Navistar’s Privilege Claims Over Communications Involving 
Lobbying and Communications Firms……………………………...6 

 
              3.   Navistar’s Privilege Claims Over Draft SEC Filings……………….8 

 
C. Efforts to Resolve Disputes Over Navistar’s Privilege Claims……………..8 

D. Facts Relating to Navistar’s Efforts to Obtain a Certificate of Conformity 
from the EPA ………………………………………………….....................9 
  
  1.  The EPA Enacts a 0.2 NOx Standard for Heavy-Duty Diesel  
       Engines……………………………………………………………..9 
 
  2.  Navistar Develops an “EGR” Technology Different from Its   
       Competitors………………………………………………………..10 
 
  3.  Navistar Relies On Emissions Credits to Sell Engines While It       
       Attempts to Obtain EPA Certification……………………………..10 
 

    4.  As Navistar Begins to Run Out of Emissions Credits, The EPA   
         Passes an Interim Final Rule Regarding Nonconformance   
         Penalties……………………………………………………..……..11 

   5.   Navistar Retains ASGK as a Consultant for Public Affairs and   
               Related Matters…………………………………………………….12 

   6.   Navistar Hires Law and Lobbying Firm Williams & Jensen………14 

   7.   Navistar Retains Alston & Bird for Lobbying Services……………15 

   8.   Navistar Also Retains Tyrone Fahner of Mayer Brown as a         
         Lobbyist…………………………………………………………….19 

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ii 
 

   9.   Navistar Shifts Its Strategy to Adopt SCR Technology……………20 

 II.  ARGUMENT……………………………………………………………………….21 

 A.  This Court is Empowered to Grant the Relief Sought……………………...21 

  B.  The Attorney-Client Privilege and Work Product Doctrine Are Narrowly   
        Construed…………………………………………………………………...22 

  C.  The Attorney-Client Privilege Only Applies to Communications Necessary  
              for the Giving or Seeking of Legal Advice…………………………………22 

  D.  The Work Product Doctrine Only Applies to Documents Created Because      
        of the Prospect of Litigation………………………………………………...23 

  E.  Navistar Improperly Has Asserted Privilege Over the Lobbying and/or   
       Communications Firms’ Documents………………………………………..24 

1. Neither the Attorney-Client Privilege Nor Work Product Doctrine 
Applies to Communications Involving Public Affairs and 
Communications Consultant ASGK………………………………..25 
 
 a.  Communications Including ASGK Neither Involve The           
      Giving or Seeking of Legal Advice Nor Were Created in      
      Anticipation of Litigation……………………………………25 
 
  b.  Navistar Waived Any Privileges on Documents in Which          
       It Included ASGK as a Third-Party Participant…………….27 
 

    c.   Communications Involving Only Non-Attorney ASGK   
          Employees Presumptively Are Non-Privileged…………….28 

   2.  Communications Involving Lobbying Firm Alston & Bird Are Not  
        Privileged……………………………………………………………30 

    a.  Alston & Bird Provided Lobbying Services, Not Legal     
         Services, To Navistar………………………………………..30 

    b.  Communications or Notes Involving Alston & Bird, Acting       
         as a Lobbying Firm, Are Not Privileged…………………….31 

    c.  Even Assuming That Alston & Bird Was Acting as a Law    
         Firm, Not All Communications With Alston & Bird Are  
         Privileged…………………………………………………….32 

   3.  Communications or Notes Involving Lobbyist Tyrone Fahner of Mayer 
        Brown Are Not Privileged…………………………………………...33 

4.  Communications Involving Lobbying Firm Williams & Jensen Are                        
Not Privileged………………………………………………………..35 

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iii 
 

F.  Navistar Improperly Has Asserted Privilege Over Internal Navistar Non-       
Attorney Communications…………………………………………………36 

G. Navistar Improperly Has Asserted Privilege Over Draft SEC Filings And 
Communications Regarding Those Filings………………………………...37 

  1.  Draft SEC Filings or Communications Regarding Those Filings            
      Do Not Constitute Work Product…………………………………..37 

  2.  The Attorney-Client Privilege Does Not Protect the Draft SEC Filings     
      Redacted and Withheld by Navistar…..……………………………38 

 

 CONCLUSION………………………………………………………………………..42 

  

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iv 
 

TABLE OF AUTHORITIES 

Cases 

Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 152 F.R.D. 132 (N.D. Ill. 1993)………..22, 23, 34 

A&R Body Specialty and Collision Works v. Progressive Casualty Ins. Co., 2014 WL 657688  
 (D. Conn. Feb. 20, 2014)………………………………………………………...31, 32, 34 

Autor v. Pritzker, 740 F.3d 176 (D.C. Cir. 2014)………………………………………..………34 

Baxter Travenol Labs. v. Abbott Labs., 1987 WL 12919 (N.D. Ill. June 19, 1987)……………..28 

Binks Manufacturing Co. v. Nat’l Presto Indus., 709 F.2d 1109 (7th Cir, 1983)………………...24 

Black & Veatch Corp. v. Aspen Ins. (UK) Ltd., 297 F.R.D. 611 (D. Kan. 2014)……………29, 36 

BSP Software v. Motio, 2013 WL 3456870 (N.D. Ill. July 9, 2013)…………………………….27 

Burden-Meeks v. Welch, 319 F.3d 897 (7th Cir. 2003)…………………………………………..32 

Christman v. Brauvin Realty Advisors, Inc., 185 F.R.D. 251 (N.D. Ill. 1999)…………………..38 

Comtide Holdings, LLC v. Booth Creek Mgmt. Corp., 2010 WL 5014483 (S.D. Ohio Dec. 3, 
 2010)……………………………………………………………………………………..29 
 
Construction Workers Pension Fund – Lake County and Vicinity v. Navistar International Corp., 
 2014 WL 3610877 (N.D. Ill. July22, 2014)……………………………………………….9 
 
DeGeer v. Gillis, 755 F. Supp. 2d 909 (N.D. Ill. 2010)………………………………………….21 

Digital Vending Services Int’l v. The University of Phoenix, 2013 WL 1560212 (E.D. Va. April 
 12, 2013)…………………………………………………………………………………36 
 
ePlus, Inc. v. Lawson Software, 280 F.R.D. 247 (E.D. Va. 2012)……………………………….28 

Evans v. City of Chicago, 231 F.R.D. 302 (N.D. Ill. 2005)……………………...31, 33, 34, 36, 39 

Flagstar Bank  v. Freestar Bank, 2009 WL 2706965 (N.D. Ill. Aug. 25, 2009)………………...26 

Freeport-McMoran Sulphur, LLC v. Mike Mullen Energy Equipment Resource, Inc., 2004 WL 
 1299042 at *6-*7 (E.D. La. June 4, 2004)……………………………………………….39 

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v 
 

Hill v. State Street Corp., 2013 WL 6909524 (D. Mass. Dec. 30, 2013)……………………27, 37 

Hobley v. Burge, 433 F.3d 946 (7th Cir. 2006)..…………………………………………………21 

In re Application of Chevron Corp., 749 F. Supp. 2d 141 (S.D.N.Y. 2010)…………….31, 32, 34 

In re Avandia Marketing, Sales Practices and Prod. Liab., 2009 WL 4807253 (E.D. Pa. Oct. 2, 
 2009)……………………………………………………………………………………..39 

In re Bank One Secur. Litig., 209 F.R.D. 418 (N.D. Ill. 2002)………………………………24, 38 

In re Behr Dayton Thermal Prods., 298 F.R.D. 369 (S.D. Ohio 2013)……………………...29, 36 

In re Bisphenol-A (BPA) Polycarbonate Plastic Prods. Liab. Litig., 2011 WL 1136440         
 (W.D. Mo. Mar. 25. 2011)……………………………………………………………….31 
 
In re Carl Walsh, 623 F.2d 489 (7th Cir. 1980)………………………………………………….23 

In re Chase Bank USA, N.A. Check Loan Contract Litig., 2011 WL 3268091 (N.D. Cal. July 28, 

2011)……………………………………………………………………………………………..29 

In re Lindsey, 148 F.3d 1100 (D.C. Cir. 1998)…………………………………………………..31 

In re JPMorgan Chase & Co. Secur. Litig., 2007 WL 2363311 (N.D. Ill. Aug. 13, 2007)……..38 

In re Mortgage Store, 509 B.R. 292 (Bankr. D. Haw. 2014)……………………………………27 

In re Prograf Antitrust Litig., 2013 WL 1868227 (D. Mass. May 3, 2013)……………………..25 

In re Vioxx Prods. Liab. Litig., 501 F. Supp. 2d.( E.D. La. 2007)…………..………………37, 39  

Ivy Hotel San Diego, LLC v. Houston Casualty Co., 2011 WL 4914941(S.D. Cal. 2011)……...21 

Jackson v. Deen, 2013 WL 1911445 (S.D. Ga. May 8, 2013)…………………………………..27 

Kleen Prods. v. Int’l Paper, 2014 WL 6475558 (N.D. Ill. Nov. 12, 2014)……………….....23, 39 

Knox Energy v. Gasco Drilling, 2014 WL 4052806 (W.D. Va. Aug. 14, 2014)………………..27 

Lee v. Chicago Youth Centers, 2014 WL 2618537 (N.D. Ill. June 10, 2014)…...23, 33, 34, 36, 39 

LG Electronics U.S.A., Inc. v. Whirlpool Corp., 661 F. Supp. 2d 958 (N.D.Ill. 2009)………….26 

Case: 1:14-cv-10163 Document #: 23 Filed: 01/22/15 Page 6 of 51 PageID #:194



vi 
 

Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577 (7th Cir. 1981)……………………………………23 

Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012)…………………………………..9,11,12 

McCook Metals L.L.C. v. Alcoa Inc., 192 F.R.D. 242 (N.D. Ill. 2000)………………………….22 

McNamee v. Clemens, 2013 WL 6572899 (E.D.N.Y. Sept. 18, 2013)………………………25, 26 

Nat’l Ass’n of Manufacturers v. Taylor, 582 F.3d 1 (D.C. Cir. 2009)…………………………...30 

Newmarkets Partners LLC v. Sal. Oppenheim Jr. & Cie. S.C.A., 258 F.R.D. 95,  
 (S.D.N.Y. 2009)………………………………………………………………………….32 
 
Preferred Care Partners Holding Corp. v. Humana, Inc., 258 F.R.D. 684 (S.D. Fla. 2009)…...39 

PSK v. Hicklin, 2010 WL 2541795 (N.D. Iowa June 22, 2010)…………………………………28 

Rawat v. Navistar Int’l Corp., 2010 WL 1417840 (N.D. Ill. Apr. 7, 2010)…………………24, 38 

RBS Citizens v. Husain, 291 F.R.D. 209 (N.D. Ill. 2013)……………………………………38, 40 

Resurrection Healthcare and Factory Mut. Ins. Co. v. GE Health Care, 2009 WL 691286 (N.D. 
 Ill. Mar. 16, 2009)………………………………………………………………………..38 
 
Sandra T.E. v. South Berwyn School District 100, 600 F.3d 612 (7th Cir. 2010)………………..32 

SEC v. Chesnoff, 2006 WL 2052371 (N.D. Tex. July 18, 2006)………………………………...22 

SEC v. Shanahan, 504 F. Supp. 2d 680 (E.D. Mo. 2007)………………………………………..22 

Smithkline Beecham Corp. v. Apotex Corp., 193 F.R.D. 530, 538 (N.D. Ill. 2000)……………..41 

Sprecher v. Graber, 716 F.2d 968 (2d Cir. 1983)………………………………………………..22 

Traficante v. Homeq Servicing Corp., 2010 WL 3167435 (W.D. Pa. Aug. 10, 2010)…………..28 

United Food and Commercial Workers Union v. Chesapeake Energy Corp., 2012 WL 2370637 
 (W.D. Okla. June 22, 2012)……………………………………………………………...39 
 
U.S. v Evans, 113 F.3d 1457 (7th Cir. 1997)…………………………………………………….22 

U.S. ex. rel. Fields v. Sherman Health Sys., 2004 WL 905934 (N.D. Ill. April 28, 2004)..33,34,36 

Case: 1:14-cv-10163 Document #: 23 Filed: 01/22/15 Page 7 of 51 PageID #:195



vii 
 

U.S. v. Hatfield, 2009 WL 3806300 (E.D.N.Y. Nov. 13, 2009)……...………………………….32 

U.S. Home Corp. v. Settlers Crossing, LLC, 2012 WL 5193835 (D. Md. Oct. 18, 2012)………...6 

U.S. v. White, 950 F.2d 426 (7th Cir. 1991)……………………………………………………..22 

Wartell v. Purdue Univ., 2014 WL 4261205 (N.D. Ind. Aug. 28, 2014)……………………..…32 

Wierciszewski v. Granite City Illinois Hosp. Co., 2011 WL 5374114 (S.D. Ill. Nov. 7, 2011)…29 

Rules 

Rule 10(b)-5……………………………………………………………………………………….4 

Rule 26(b)(5)(B)…………………………………………………………………………………..6 

Statutes 

2 U.S.C. § 1602(7)…………………………………………………………………………….....30 

2 U.S.C. § 1602(8)(A)…….……………………………………………………………………...30 

2 U.S.C. § 1602(10)……………………………………………………………………….…30, 34 

15 U.S.C. § 77v(b)……………………………………………………………………………….21 

15 U.S.C. § 78u(c)……………………………………………………………………………….21 

Section 17(a) of the Securities Act of 1933……………………………………………………….4 

Section 10(b) of the Securities Exchange Act of 1934……………………………………………4 

Section 22(b) of the Securities Act of 1933……………………………………………………...21 

Section 21(c) of the Securities Exchange Act of 1934…………………….…………………….21 

Other Authorities 

Illinois State Bar Association Opinion on Professional Conduct No. 98-04 (January 1999)…….6 

  

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INTRODUCTION 
 

 
 Applicant, the United States Securities and Exchange Commission (“SEC”), respectfully 

requests that this Court compel respondent Navistar International Corp. (“Navistar”) to produce 

certain documents that Navistar improperly has redacted and withheld as privileged in response 

to SEC investigative subpoenas.   

The SEC staff is conducting an investigation to determine whether Navistar and others 

may have violated the federal securities laws by making false or misleading statements or 

material omissions, including in Navistar’s public filings with the SEC.  The current focus of the 

SEC’s investigation relates to statements made by Navistar and others regarding Navistar’s 

efforts to obtain a certificate of conformity (“Certificate”) from the U.S Environmental 

Protection Agency (“EPA”) (certifying that Navistar’s engines complied with certain provisions 

of the Clean Air Act).  The SEC is conducting its investigation through its Chicago Regional 

Office, based in this District.  Navistar is a publicly traded company based in Lisle, Illinois.  The 

SEC’s investigation is ongoing; neither the SEC nor its staff has concluded that any person or 

entity has engaged in wrongdoing. 

The SEC has issued various investigative subpoenas to Navistar from 2012 through the 

present.  The focus of the SEC’s subpoenas since May 2013 has related to Navistar’s EPA 

certification efforts, while the SEC’s earlier subpoenas related to other matters. 

The SEC has also issued subpoenas to the firms of ASGK Public Strategies (“ASGK”), 

Alston & Bird LLP (“Alston & Bird”), Mayer Brown LLP (“Mayer Brown”), and Williams & 

Jensen, each of which performed lobbying and/or communications-related services (collectively, 

the “Lobbying and Communications Firms”) to Navistar.  The SEC’s subpoenas to these firms 

requested information about the nature of their work for Navistar and about their 

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communications with Navistar and others concerning their work.  This information bears directly 

on whether Navistar’s understanding of the progress of its efforts to obtain EPA certification, as 

reflected in its lobbying efforts and its communications with others, was consistent with its 

public statements regarding this issue. 

In response to the SEC’s subpoenas to the Lobbying and Communications Firms, 

Navistar, as the Lobbying and Communications firms’ client, determined which of their 

documents would be redacted and withheld as privileged, and prepared privilege logs provided to 

the SEC on behalf of the Lobbying and Communications Firms.1   

 Navistar has produced many thousands of documents in response to the SEC’s 

subpoenas, but it also has redacted and withheld thousands more documents based on the 

attorney-client privilege and work product doctrine.  Navistar has provided the SEC with 

privilege logs for most, but not all, of the documents Navistar has redacted and withheld as 

privileged.      

The SEC has not challenged many of Navistar’s privilege assertions.  Among other 

things, the SEC generally is not challenging Navistar’s privilege assertions over communications 

directly involving Navistar’s attorneys, acting in a legal capacity, where the attorneys were the 

senders or primary recipients of the communications.  But many of Navistar’s other privilege 

assertions appear plainly to be incorrect based on the applicable law governing privilege claims, 

based on Navistar’s descriptions of redacted and withheld documents, and based on the SEC 

staff’s review of documents that Navistar clawed back on privilege grounds after the staff 

already had reviewed the supposedly privileged materials.  

                                                 
1 As part of the SEC’s request that the Court conduct an in camera  review of the documents that Navistar 
has redacted and withheld from the Lobbying and Communications Firms’ productions, the SEC will 
provide the Court with copies of the privilege logs provided to the SEC for the Lobbying and 
Communications Firms. 

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Many of Navistar’s assertions of the attorney-client privilege and work product doctrine 

in support of its redactions and withholding of documents fall into three broad categories: (1) 

documents involving the Lobbying and Communications Firms; (2) communications involving 

only non-attorneys, including non-attorney notes; and (3) draft SEC filings and communications 

regarding those filings.  While it appears that Navistar improperly has asserted privilege over 

thousands of documents, the SEC is attempting to narrow the dispute before the Court by 

focusing on those documents that appear most important to the SEC’s investigation, as well as 

documents that implicate privilege issues common to many of Navistar’s privilege claims. 

None of the documents falling into these three categories were prepared in anticipation of 

litigation, and, therefore, the work product doctrine does not apply.  Further, none of the 

documents involve the seeking or giving of legal advice, and therefore the attorney-client 

privilege does not protect the documents either.  Even if the attorney-client privilege would 

protect the documents from disclosure, Navistar has waived the privilege over many of the 

documents as to which it claims privilege.  Navistar has waived the privilege by sending certain 

of the documents to third-parties, such as the Lobbying and Communications Firms. 

The SEC now asks the Court to conduct an in camera review of documents that Navistar 

improperly has redacted and withheld involving the Lobbying and Communications Firms, 

communications involving only non-attorneys, and draft SEC filings and communications 

regarding those filings.2  Because these documents are not privileged, the Court should order 

Navistar to produce them after the Court conducts its in camera review.   

                                                 
2 It appears that there is significant duplication in Navistar’s privilege logs.  For example, Navistar has 
made separate privilege log entries for different copies of a single email, contained in various email 
strings in the electronic mailboxes of various custodians.  The SEC is not requesting that the Court 
conduct an in camera review of duplicate versions of documents that Navistar has redacted and withheld.  
When taking duplication into account, the SEC estimates that it is requesting that the Court conduct an in 
camera review of several hundred documents. 
   

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I. Facts 

A. The SEC’s Investigation 

In July 2012, the SEC issued a Formal Order captioned In the Matter of Navistar Corp., 

SEC File No. C-7947-A.  (Declaration of Robert J. Burson, submitted herewith, ¶ 4)  The Formal 

Order designates and empowers certain members of the SEC’s staff as officers of the SEC to, 

among other things, subpoena witnesses for testimony, compel their attendance, gather evidence 

and require the production of materials relevant to the investigation.  (Id.) 

This investigation concerns the activities of Navistar, a manufacturer and marketer of 

integrated mid-range and heavy-duty diesel engines and trucks.  (Id.)  Pursuant to this 

investigation, the SEC seeks, among other things, information regarding whether Navistar and its 

representatives have engaged in violations of the antifraud provisions of the federal securities 

laws, Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the 

Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.  (Id.) 

B. Navistar’s Responses to the SEC’s Subpoenas and Its Privilege Claims 

In response to the SEC’s subpoenas to Navistar, Navistar has produced hundreds of 

thousands of pages of documents, but it has also redacted and withheld many thousands of 

pages more as privileged.  (Burson Decl., ¶ 10)  In a May 2014 letter to the SEC, Navistar’s 

counsel advised that as of that date, Navistar had produced privilege logs3 itemizing more than 

2,500 redactions and withheld documents and expected to log an additional 3,500 redactions 

and withheld documents.  (Id.)  In a July 2014 letter, Navistar’s counsel advised that as of that 

date, Navistar had withheld an additional 983 documents sent between Navistar and its outside 

counsel that Navistar had not logged on a privilege log.  (Id.)  Subsequent to this letter, Navistar 

                                                 
3 As part of the SEC’s request that the Court conduct an in camera  review of certain documents that 
Navistar has redacted and withheld, the SEC will provide the Court with copies of the privilege logs 
provided by Navistar for documents relating to engine certification issues. 

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produced several additional privilege logs to the SEC itemizing several hundred additional 

redactions and withheld documents.  Many of Navistar’s assertions of the attorney-client 

privilege fall into three broad categories: 

1. Navistar’s Privilege Claims Over Communications Involving Only Non-
Attorneys 
 

The majority of communications that Navistar has redacted and withheld as privileged in 

response to the SEC’s subpoenas are communications involving only non-attorneys, including 

non-attorney notes.  Even though the communications involve only non-attorneys, Navistar has 

claimed privilege over the communications – usually asserting both the attorney-client privilege 

and the work product doctrine – by claiming that the communications “memorialize,” “reflect,” 

or “reflect material memorializing” a communication to or from an attorney.  (See, e.g., 11-5-14 

Withheld Documents Privilege Log, Entry Nos. 76-79, 81-84; 11-10-14 Withheld Documents 

Privilege Log, Entry No. 6; 11-10-14 Redacted Documents Privilege Log Entry Nos. 1-9, 12-

16)  Using this rationale, Navistar has redacted and withheld thousands of communications 

involving only non-attorneys.   

The SEC acknowledges that, as a general principle, communications involving only non-

attorneys can be privileged under some circumstances.  But Navistar’s privilege claims are 

unusual in that the majority of its many thousands of privilege claims apply to documents that 

no attorney has wrote, sent, or received. 

In April 2014, Navistar’s counsel wrote to the SEC staff identifying 56 documents that 

Navistar asserted had inadvertently been produced despite being protected by privilege.  

Navistar requested that the SEC immediately destroy all of these documents and return them to 

Navistar.  The SEC staff responded that the staff had already reviewed some of these 

documents.  The SEC staff agreed to destroy any of these documents that the staff had not 

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already reviewed or where the staff agreed with Navistar’s privilege claims, but as to the 

remainder, the SEC staff agreed to sequester them and not use them in the investigation, except 

to the extent such use was necessary to resolve privilege disputes and until any such privilege 

disputes were resolved.4  To assess Navistar’s privilege claims over the documents the SEC 

staff already had reviewed, the SEC re-reviewed these documents.  None of the senders or 

recipients of these documents were attorneys.  The staff concluded that few of Navistar’s 

privilege claims with respect to those documents were valid.  This assessment informed the 

SEC’s view of Navistar’s privilege claims regarding other documents involving only non-

attorneys. 

2. Navistar’s Privilege Claims Over Communications Involving Lobbying 
and Communications Firms  
 

Navistar has redacted and withheld as privileged hundreds of communications involving 

the Lobbying and/or Communications Firms of ASGK, Mayer Brown, Alston & Bird, and 

Williams & Jensen, although Navistar’s approach has varied somewhat within this group of 

firms.  (Burson Decl., ¶ 11)  In response to the SEC’s subpoenas to the firms of ASGK and 

Williams & Jensen, Navistar asserted privilege over approximately 163 documents and 38 

documents, respectively, and permitted ASGK and Williams & Jensen to produce a significant 

number of documents to the SEC without privilege claims.  With respect to the SEC’s 

subpoenas to Alston & Bird, Navistar withheld as privileged all substantive communications 

between Navistar and Alston & Bird, and among Alston & Bird lawyers and non-lawyers, as 

                                                 
4Various authorities permit a party who reviews a document prior to a privilege being asserted over the 
document to use the document in an effort to resolve a privilege dispute.   See, e.g., U.S. Home Corp. v. 
Settlers Crossing, LLC, 2012 WL 5193835 at *5 (D. Md. Oct. 18, 2012) (“It would be wholly illogical to 
read Rule 26(b)(5)(B) as prohibiting the use of documents ‘subject to a claim of privilege’ when resolving 
that very claim of privilege.”); cf. Ill. State Bar Ass’n Opinion on Professional Conduct No. 98-04 
(January 1999) (it is “unrealistic” for a receiving lawyer to “unring the bell” and ignore material 
information that has been received and reviewed in good faith.) 

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well as notes created by Alston & Bird, collectively withholding approximately 316 documents.  

Navistar permitted Alston & Bird to produce communications between Alston & Bird and third-

parties (mostly public officials and their staffs) in unredacted form.  With respect to the SEC’s 

subpoena to Mayer Brown, Navistar has withheld virtually all substantive documents involving 

Mayer Brown, totaling approximately 193 documents.  (See ASGK, Williams & Jensen, Alston 

& Bird, and Mayer Brown Privilege Logs) 

In November 2014, the SEC staff determined that the ASGK and Williams & Jensen 

document productions contained certain documents in unredacted form that Navistar 

simultaneously had redacted and withheld as privileged in other productions in response to SEC 

subpoenas.  The SEC staff alerted Navistar’s lawyers to this issue, and Navistar responded by 

asserting privilege over most of these documents and demanding that the unredacted documents 

be destroyed.  The SEC staff sequestered these documents.  Having already reviewed the 

portions of these documents that Navistar claimed to be privileged, the SEC staff re-reviewed 

the documents to assess Navistar’s privilege claims.  The staff believes none of Navistar’s 

privilege claims with respect to these documents are valid.  This assessment informed the SEC’s 

view about Navistar’s assertion of privilege over other documents involving the Lobbying and 

Communications Firms. 

3. Navistar’s Privilege Claims Over Draft SEC Filings 

Navistar also has redacted and withheld certain draft SEC filings and communications 

regarding those filings, mostly on the grounds of both the attorney-client privilege and work 

product doctrine.  As a result, Navistar has redacted and withheld draft language in Navistar’s 

SEC filings relating to Navistar’s efforts to obtain a certification from the EPA, which is part of 

the focus of the SEC’s investigation.  Mostly non-attorneys were involved in the 

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communications relating to SEC filings that Navistar has redacted and withheld. 

C. Efforts to Resolve Disputes Over Navistar’s Privilege Claims 

Over many months, the SEC staff repeatedly has attempted to resolve its disputes with 

Navistar over Navistar’s privilege claims.  (Burson Decl., ¶ 12)  In addition to several telephone 

conversations and in-person discussions in which SEC staff questioned Navistar’s privilege 

assertions, on August 8, 2014, the SEC wrote a detailed letter to Navistar’s counsel outlining the 

SEC’s challenges to many of Navistar’s privilege claims.  (Id.)  The SEC followed with a second 

letter to Navistar dated August 28, 2014, which focused on Navistar’s privilege claims over 

certain of the Lobbying and Communications Firms’ documents responsive to the SEC’s 

subpoenas.  On September 24, 2014, the SEC staff conducted a meet-and-confer session in the 

office of Navistar’s counsel in an effort to resolve the privilege disputes.  (Id.)  Subsequent to 

this meeting, the SEC staff continued to communicate with Navistar’s counsel by telephone and 

email in an effort to resolve the parties’ disputes over Navistar’s privilege claims.  (Id.)  

These efforts narrowed, but did not resolve fully, the privilege disputes between the SEC 

and Navistar.  Prior to filing this subpoena enforcement action, Navistar agreed to withdraw its 

claims of attorney-client privilege over documents provided by Navistar to its independent 

auditor, KPMG, LLP.  Additionally, Navistar agreed to revise or eliminate redactions on 

approximately 264 additional documents, approximately 65 of which were produced without any 

redactions.  (Id.)  After the SEC originally filed this subpoena enforcement action in December 

2014 and before the SEC filed its First Amended Application, Navistar changed or withdrew its 

privilege claims on a number of additional documents.  But even after Navistar’s changes to its 

privilege claims, many documents remain in dispute.  (Id.)  Because the parties’ attempts to 

resolve their disputes without court action did not substantially eliminate the parties’ disputes, 

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and because the documents redacted and withheld by Navistar are relevant and important to the 

SEC’s investigation, the SEC staff notified Navistar that the SEC would file this Application.  

(Id.) 

D. Facts Relating to Navistar’s Efforts to Obtain a Certificate of Conformity 
from the EPA5 

 
The SEC’s Application is directed at Navistar’s improper assertion of privilege over 

documents relating to Navistar’s efforts to obtain a Certificate from the EPA, and Navistar’s 

disclosures regarding the status of those efforts.  The SEC provides some factual background 

regarding these efforts below. 

1. The EPA Enacts a 0.2 NOx Standard for Heavy-Duty Diesel Engines 

As a manufacturer of heavy-duty diesel engines, Navistar must obtain a Certificate from 

the EPA each year for each type of engine that Navistar sells.  A Certificate from the EPA 

confirms that the engine meets the Clean Air Act standards. 

In 2001, pursuant to the Clean Air Act, the EPA enacted a rule requiring a 95 percent 

reduction in the emissions of nitrogen oxide (“NOx”) from heavy-duty diesel engines by 2010.  

Under this rule, new engines were to emit NOx at a rate of no more than 0.2 grams of nitrogen 

oxide per horsepower hour (“0.2 NOx”) by 2010 (the “0.2 NOx standard”). 

2. Navistar Develops an “EGR” Technology Different from Its Competitors 

To comply with the 0.2 NOx standard, Navistar’s competitors opted to develop a 

technology called selective catalytic reduction (“SCR”).  SCR technology controls NOx 

                                                 
5 The facts set forth in this section generally are derived from: (1) the D.C. Circuit’s opinion in Mack 
Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012); (2) the April 9, 2012 Declaration of Patrick E. 
Charbonneau filed by Navistar (attached hereto as Exhibit A) in support of its Brief as Intervenor in the 
Mack Trucks litigation in the D.C. Circuit; (3) Judge Ellis’ opinion in the class action lawsuit captioned 
Construction Workers Pension Fund – Lake County and Vicinity v. Navistar International Corp., 2014 
WL 3610877 (N.D. Ill. July 22, 2014); and (4) Navistar’s Memoranda in Support of its Motions to 
Dismiss the Construction Workers Pension Fund class action.  (Dkt. Nos. 100, 133 in Case No. 13 C 
2111 (N.D. Ill.)). 

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emissions in the exhaust stream by using a special after-treatment system and a diesel-based 

chemical agent.  Using SCR, Navistar’s competitors had obtained Certificates from the EPA by 

2010 indicating that the engines manufactured by these companies met the 0.2 NOx standard. 

Navistar, however, chose a different path from its competitors to try to meet the 0.2 NOx 

standard.  Instead of using SCR technology, Navistar opted to develop exhaust gas recirculation 

(“EGR”)-only technology.  EGR-only technology reduces NOx emissions in the combustion 

chamber by re-circulating a portion of an engine’s exhaust back into the engine’s cylinders.  

Because EGR-only technology is designed to result in clean-burning engines, the technology 

does not depend on other emission related components, such the after-treatment system 

employed in SCR technology, to reduce emissions. 

3. Navistar Relies On Emissions Credits to Sell Engines While It Attempts 
to Obtain EPA Certification 
 

Navistar used EGR-only technology to reduce NOx emissions in several EPA-certified 

engines, including an engine that the EPA certified in 2010.  However, Navistar was 

unsuccessful in using EGR-only technology to obtain a Certificate for an engine that met the 0.2 

NOx standard. 

Because Navistar was unable to develop EGR-only technology sufficiently to obtain a 

Certificate for an engine meeting the 0.2 NOx standard, all else being equal, Navistar would have 

been unable to sell certain engine families in the United States at some point in 2010.  However, 

prior to 2010, Navistar had produced engines whose emissions were cleaner than required by the 

EPA.  This allowed Navistar to generate a “bank” of EPA credits, which, under the EPA’s 

emissions credits system, Navistar was allowed to use so it could continue to sell certain engine 

families even though those engine families had not met the 0.2 NOx standard.  In 2010 and 2011, 

Navistar continued to use these banked emissions credits legally to allow the sale of certain 

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engine families that did not meet the 0.2 NOx standard. 

In the meantime, Navistar continued to try to develop the EGR-only technology and 

obtain a Certificate for an engine that could meet the 0.2 NOx standard.  In February 2011, 

January 2012, and May 2012, Navistar submitted applications to the EPA for certification at 0.2 

NOx for one of its engine families.  According to Navistar, from 2001 through 2012, Navistar 

devoted tens of thousands of employee hours and approximately $700 million in the 

development of its EGR-only technology.  (See Ex. A, 4-9-12 Declaration of Patrick 

Charbonneau in Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012), at ¶ 13). 

4. As Navistar Begins to Run Out of Emissions Credits, The EPA Passes an 
Interim Final Rule Regarding Nonconformance Penalties 
 

As time passed, Navistar depleted its banked emissions credits by selling engines that did 

not meet the 0.2 NOx standard.  In October 2011, Navistar informed the EPA that it would run 

out of emissions credits sometime in 2012.   

The EPA, estimating that Navistar might have as little as three to four months of credits 

remaining, promulgated an Interim Final Rule (“IFR”) on January 31, 2012 aimed at facilitating 

Navistar’s continued sale of certain engine families that did not meet the 0.2 NOx standard.  The 

IFR made nonconformance penalties (“NCPs”) available to Navistar and permitted it to sell 

heavy-duty diesel engines in model years 2012 and 2013 as long as it paid a penalty of $1,919 

per engine and as long as the engines emitted fewer than 0.5 grams of nitrogen oxide per 

horsepower hour (“0.5 NOx”).6   

Shortly after the EPA promulgated the IFR, Navistar’s competitors sued the EPA over the 

IFR, claiming that the EPA lacked the requisite good cause to forego notice and comment 

procedures with respect to the IFR and that the EPA erroneously determined through the IFR that 
                                                 
6 Significantly, however, the California Environmental Protection Agency and the environmental 
protection agencies of nine other states did not allow the use of NCPs to satisfy emissions standards. 

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NCPs should be available to Navistar.  Navistar intervened in the lawsuit on behalf of the EPA. 

In June 2012, the D.C. Circuit vacated the EPA’s IFR.  See Mack Trucks, Inc. v EPA, 682 F.3d 

87 (D.C. Cir. 2012). 

5. Navistar Retains ASGK as a Consultant for Public Affairs and Related 
Matters 

 
In May 2012, Navistar retained ASGK, a firm co-founded by David Axelrod, a former 

White House Senior Adviser, and Eric Sedler, a former adviser to Illinois House Speaker 

Michael Madigan.  Navistar retained ASGK to perform services relating to Navistar’s efforts to 

obtain a Certificate from the EPA.  It appears that Navistar and ASGK first began discussing 

Navistar’s possible retention of ASGK in April 2012.  According to ASGK’s public website, 

ASGK’s services include public affairs, corporate communications, coalition management and 

stakeholder engagement, media and public relations, brand management, and crisis 

communications.  (Ex. B, ASGK Website Excerpt) 

According to an internal ASGK email early in the period of its Navistar engagement, in 

May 2012, Navistar was “in the midst of a crisis at EPA right now related to certification of their 

zero-emissions engine.”  (See Ex. C, 5-11-12 email Cantillon to DeAngelis)  According to the 

email, ASGK’s statement of work for the engagement included generating: (1) a list of “third-

party organizations that can be activated to either put pressure on EPA or provide political cover 

for certification;” (2) a “media plan;” (3) Navistar “plant/facility host community activation;” 

and (4) “[w]ork on messaging materials.”  (Id.)  The email noted that “Patrick [Charbonneau] of 

Govt Relations [at Navistar] is leading the crisis effort which [has] involved mostly lobbyists.”  

(Id.) 

As part of its work for Navistar, ASGK produced several iterations of an “issue 

management plan,” the purpose of which was “to facilitate a clear-decision making infrastructure 

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of help Navistar manage a potentially high-profile and damaging issue.”  (See Ex. Y, 5-25-12 

email Adler to Cantillon, Spangler, Culloton, and Denning, with attachment, at ASGK-NAV-E-

00003150)  In a May 25, 2012 version of the issue management plan that ASGK sent to 

Navistar’s public relations personnel, ASGK proposed to help Navistar to develop a 

“communications strategy [that] will closely mirror its business strategy with the goal of 

obtaining one or two desired outcomes.”  (Id. at ASGK-NAV-E-00003152)  These two desired 

outcomes were that either “Navistar receives .2 NOx engine certification from the EPA” or that 

“Navistar continues working with the EPA and has a clear path to engine certification that can be 

made public and will occur in a timely manner (before Navistar’s stock of pollution credits is 

depleted.”)  (Id.)  ASGK told Navistar that “we will communicate with policymakers, the media 

and stakeholders about what this case is all about and what’s fully at risk.”  (Id.)  ASGK 

described the ASGK employees who would be working on the assignment as fulfilling a 

“communications” role for Navistar.  (Id. at ASGK-NAV-E-00003152-53) 

Navistar’s Vice-President of Government Relations, Patrick Charbonneau 

(“Charbonneau”) (the head of Navistar’s government relations department in 2012), testified that 

he hired ASGK as a lobbyist, though he modified that testimony after his attorneys objected.  

(See Ex. D, 12-9-14 Charbonneau Test. at 40:23-42:8; 12-10-14 Charbonneau Test. at 408:14-

409:13)  Charbonneau testified that Navistar hired ASGK to communicate with the EPA and 

with staff members of political offices Navistar interfaced with (id. at 43:1-11) and to reach out 

to the White House regarding the “uneven playing field,” in Navistar’s view, between Navistar 

and its competitors in terms of the EPA’s treatment of engine certification issues.  (Id. at 46:11-

22) 

6. Navistar Hires Law and Lobbying Firm Williams & Jensen 

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14 
 

At some point prior to 2012, Navistar retained the Washington law and lobbying firm of 

Williams & Jensen to assist it with various matters.  According to Williams & Jensen’s public 

website, Williams & Jensen has “over four decades of law & lobbying experience” and is “one 

of the few independent law firms in Washington with a practice focused primarily on lobbying.”  

(See Ex. E, Williams & Jensen Website Excerpt)  Williams & Jensen employs lawyers and non-

lawyers as lobbyists.  The individual who appears to have been principally responsible for 

Williams & Jensen’s work for Navistar, Michael Beer, is not a lawyer and no longer works at 

Williams & Jensen.  But according to his new firm’s public website, he is one of “a team of 6 

lobbyists with more than eight decades of Washington lobbying experience, and with a total of 

more than 100 years of directly relevant Washington experience in the Administration, in 

Congress, and in the campaign world.”  (See Ex. F, Alignment Government Strategies Website 

Excerpt) 

Among other things, in 2012 Williams & Jensen was involved in lobbying for Navistar to 

try to influence the EPA to issue a Certificate to Navistar for the 0.2 NOx emissions standard.  

For example, in a May 2012 email to members of Navistar’s governmental relations department, 

Beer suggested that, among others, Governor Quinn, Senator Durbin, and Senator Sherrod 

Brown of Ohio serve as the public officials to “carry” Navistar’s “ask” of getting the EPA to 

issue a Certificate to Navistar.  (See Ex. G, 5-15-12 email Beer to Gelb and Sheahan)  Beer also 

suggested that other members of the U.S. Senate could weigh in on the effort to persuade the 

EPA to issue a Certificate.  (Id.)  In another series of May 2012 emails, Beer and a member of 

Navistar’s governmental relations department communicated with Senator Brown’s office about 

the EPA certification issue, with Beer describing the issue as being as important “as the company 

has had in the last ten years.”  (See Ex. H, 5-10-12 email string Gelb, Beer, Slevin, McCracken 

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and 5-11-12 email string McCracken, Beer)      

Charbonneau, Navistar’s Vice-President of Government Relations, testified that Navistar 

worked with Beer and Williams & Jensen on issues relating to the “uneven playing field,” in 

Navistar’s view, between Navistar and its competitors, including reaching out to politicians and 

their staff members about these issues.  (See Ex. D, 12-9-14 Charbonneau Test. at 45:13-46:3)  

He also testified that in the past he had referred to Beer and Williams & Jensen as lobbyists on 

engine certification issues, adding that the “general term lobbyist is for these type of companies 

that can do lobbying but they aren’t necessarily doing lobbying for all these – the topics that I’m 

talking about.”  (Id. at 408:14-409:13) 

7. Navistar Retains Alston & Bird for Lobbying Services 

In approximately 2011, Navistar retained the law and lobbying firm of Alston & Bird 

LLP for a fixed fee of $25,000 per month.  (See Ex. I, 3-10-11 Letter Jones to Ustian)  Although 

Alston & Bird is a large firm that employs lawyers who provide legal services, Alston & Bird 

also employs lawyers and non-lawyers in its Legislative and Public Policy Group.  According to 

Alston & Bird’s public website, the firm’s Legislative and Public Policy group is “a team that is 

consistently recognized as one of the top lobbying firms in the country.”  (See Ex. J, Alston & 

Bird Website Excerpt for William B. Anaya)  The team of Alston & Bird lawyers and non-

lawyers who provided services to Navistar appears to have been part of the firm’s Legislative 

and Public Policy Group.  The team included former U.S. Senate Majority Leader and former 

Republican Presidential nominee Bob Dole (see Ex. K, 5-11-12 email Dole to Jarrett), former 

U.S. Senator Blanche Lincoln (a non-lawyer who is no longer with Alston & Bird), and former 

U.S. Senate Agriculture Committee staff member Robert Holifield (also a non-lawyer who is no 

longer with Alston & Bird).  (See Ex. L, 5-31-12 email Anaya to Jones, Tauzin, Lincoln, 

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Holifield; Ex. M, Lincoln Policy Group Website Excerpt).  

In investigative testimony before the SEC staff, Navistar’s Director of Government 

Relations, Brien Sheahan, described the Alston & Bird lawyers and non-lawyers working for 

Navistar as “lobbyists.”  (See Ex. N, 6-6-14 Sheahan Test. at 100:14-16 (“Q: Who is Bill Anaya? 

A: He’s a lawyer and a contract lobbyist with Alston & Bird, who was working on this.”); 117:3-

5 (“Q: Billy Tauzin? A: Former member of Congress and a lobbyist at Alston & Bird.”)) 

Similarly, ASGK’s draft Issue Management Plans for Navistar described Billy Tauzin and 

Alston & Bird as Navistar’s “Outside Lobbying Partners.”  (See Ex. Y at ASGK-NAV-E-

00003152)  

Consistent with this description, Alston & Bird’s documents produced to the SEC and not 

withheld as privileged by Navistar show that Alston & Bird’s efforts were focused on lobbying 

officials within the EPA, White House, Congress, and the office of the Illinois Governor to 

influence the EPA to certify a 0.2 NOx engine for Navistar.  For example: 

 In early May 2012, Alston & Bird’s Bob Jones emailed EPA Chief of Staff Diane 

Thompson about “the urgency of the issue facing my client, Navistar” and urging 

that “EPA leadership become involved in a certification matter today or 

tomorrow, latest.”  (See Ex. O, 5-10-12 email Jones to Thompson)  Jones told 

Thompson that an adverse decision from the EPA on certification would have 

“major effects on the company’s labor force, suppliers, and dealers” and asked 

Thompson and other senior EPA leadership to re-engage on the certification issue.  

(Id.) 

 The next day, Alston & Bird’s Dole emailed Valerie Jarrett, a senior adviser to 

President Obama, with similar language to Jones’ email to Thompson from the 

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EPA.  (See Ex. K, 5-11-12 email Dole to Jarrett)  Dole told Jarrett that Navistar 

was requesting “that EPA certify its heavy-duty engines to the .2 NOx standard 

and “[w]e think it is essential that the EPA certification office have an appropriate 

amount of involvement from leaders within the Administration.”  (Id.) 

 A few days later, in May 2012, Bob Jones of Alston & Bird engaged in an email 

exchange with another White House official, Michael Strautmanis, telling 

Strautmanis that although “no adverse decision was rendered by EPA staff 

yesterday,” the “need for a win-win resolution continues in earnest.”  (See Ex. P, 

5-15-12 email Jones to Strautmanis)  Jones asked Strautmanis “whether there is 

anything more that would be helpful to you and the Administration during the 

consideration of this vital matter.”  (Id.) 

 In June 2012, Alston & Bird’s Bill Anaya engaged in an email exchange with 

Senator Durbin’s staff noting that a Navistar executive was “personally meeting 

with [senior official] Margo Oge at the EPA on Monday to discuss the 

certification issue.”  Anaya suggested that “perhaps Governor Quinn could touch 

base with [then-EPA] Administrator Jackson and his staff could contact [EPA 

official] Ms. [Margo] Oge.”  (See Ex. Q, 6-15-12 email Anaya to Souders)  Anaya 

asked Senator Durbin’s staff whether “your office would be willing to ask 

Governor Quinn’s team to engage in this way and also whether you and your staff 

could also share a similar perspective with EPA.”  (Id.) 

Charbonneau indicated in testimony that Navistar hired Alston & Bird as lobbyists for 

Navistar.  (See Ex. D, 12-9-14 Charbonneau Test. at 40:5-40:16; 12-10-14 Charbonneau Test. at 

408:14-409:13)  He also testified that Navistar had Alston & Bird “engage in the communication 

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of the level playing field on the certifications of [competitors’] SCR [engines] versus the 

certifications of Navistar at .2 [NOx].”  (Id. at 50:7-15)  Charbonneau testified that Billy Tauzin 

and Bill Anaya were Navistar’s main contacts at Alston & Bird.    (Id. at 50:20-22)  He testified 

that Navistar had Alston & Bird reach out to politicians regarding the uneven playing field, in 

Navistar’s view, surrounding the EPA’s treatment of Navistar versus its competitors.  (Id. at 

51:6-12) 

In mid-June 2012, Charbonneau engaged in an email exchange with Daniel Ustian, 

Navistar’s then-CEO, and told Ustian “we will arrange a call for Friday with lobbyists.”  (Ex. R, 

6-12-12 emails between Charbonneau and Ustian)  The next day, Charbonneau’s assistant 

arranged for a call for that Friday with Alston & Bird – presumably among the “lobbyists” 

Charbonneau had referred to in his email exchange with Ustian.  (Ex. S, 6-12-12 to 6-13-12 

emails between Anaya, Davalos, and others)   

In 2011 and 2012, Alston & Bird registered as a lobbyist for Navistar under the federal 

Lobbying Disclosure Act of 1995 (“LDA”).  (See http://disclosures.house.gov/lc/lcsearch.aspx)  

In the second and third quarters of 2012, Alston & Bird disclosed that it engaged in lobbying 

Congress, the EPA, and the White House for Navistar on subject matters including “[i]ssues 

related to domestic manufacturing activities & engine certification.”  (See Ex. T, Alston & Bird 

Lobbying Reports for Q2 2012 and Q3 2012)  Alston & Bird’s lobbyist disclosure forms 

identified Robert Jones, Bill Anaya, and Billy Tauzin as individual Alston & Bird lobbyists for 

Navistar on these issues.  (Id.) 

8. Navistar Also Retains Tyrone Fahner of Mayer Brown as a Lobbyist 

In approximately 2012, Navistar retained Tyrone Fahner of the Mayer Brown firm.  

Fahner is a former elected public official, having served as the Illinois Attorney General from 

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1980-1983.  Fahner remains politically active; for example, in recent years, he has served as the 

chairman of the Illinois Republican Party’s Finance Committee and as the Illinois finance co-

chair and national fundraiser for Mitt Romney’s 2012 presidential campaign.  (See Ex. U, 9-7-08 

Article Crain’s Chicago Business; Ex. V, 6-16-12 Article Chicago Sun-Times).  

Sheahan testified that Fahner worked as a lobbyist for Navistar.  (See Ex. N, 6-6-14 

Sheahan Test. at 32:21-33:3 (“Q: Who was responsible for communicating with the White House 

regarding the .2 NOx certification effort from government relations?  A: The initial contact with 

[Valerie] Jarrett I believe occurred through Ty Fahner, who was a lawyer and a lobbyist at Mayer 

Brown.  He was on the team as a contract lobbyist.”)).   

Likewise, Charbonneau testified that he hired Fahner as a lobbyist to engage with 

politicians or the EPA regarding Navistar’s 0.2 NOx certification application, though he 

modified that testimony after his attorneys prompted him to do so.   (See Ex. D, 12-9-14 

Charbonneau Test. at 40:23-42:8; 12-10-14 Charbonneau Test. at 408:14-409:13)  He also 

testified that “Ty Fahner arranged and engaged with us at the EPA with a meeting with [current 

EPA Administrator and then-Assistant EPA Administrator] Gina McCarthy and some members 

of her staff” regarding EPA certification.  (Id. at 46:23-48:11) 

Consistent with Charbonneau’s testimony, one of the few substantive documents that 

Navistar has produced regarding Fahner indicates that Fahner was engaged in lobbying on behalf 

of Navistar.  In the document, an email from Charbonneau to Troy Clarke, Navistar’s current 

CEO, Charbonneau recounted a January 23, 2012 meeting involving Fahner and Navistar 

executives and EPA officials.  (See Ex. W, 6-27-12 email Charbonneau to Clarke)  In this email, 

Charbonneau told Clarke that the meeting had been cordial and that “I believe our political 

pressure through Valerie Jarrett to EPA Administrator to Gina [McCarthy] helped make this 

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conversation more positive.”  (Id.)  Documents listed on Mayer Brown’s privilege log with dates 

prior to January 23, 2012 describe Fahner’s “communications with the White House” over EPA-

related issues (see Mayer Brown Privilege Log Entry Nos. 102-103, 82-83), suggesting that 

Fahner was part of Navistar’s effort to put “political pressure” on the EPA through the White 

House.  Indeed, Charbonneau testified that Fahner communicated with Jarrett regarding 

“leveling the playing field” in terms of the EPA’s treatment of Navistar versus its treatment of 

Navistar’s competitors.  (Ex. D, 12-10-14 Charbonneau Test. at 252:13-254:8) 

Further, most of the document descriptions drafted by Navistar in Mayer Brown’s 

privilege log suggest that the withheld documents relate to lobbying activities, not providing 

legal advice.  Many of these descriptions state that the withheld documents are communications 

regarding “the status of communications with the White House,” (e.g., Mayer Brown Privilege 

Log Entry Nos. 57, 102-03), the “status of discussions with the EPA” (id. at Entry Nos. 8-16), 

the “status of discussions with the EPA and the White House” (id. at Entry Nos. 26-29), or “the 

status of discussions with Senator Durbin’s Office and the White House.”  (Id. at Entry Nos. 30, 

32)  These descriptions indicate Fahner’s involvement in lobbying public officials to pressure the 

EPA to issue a Certificate to Navistar, not involvement predominately in legal work.   

9. Navistar Shifts Its Strategy to Adopt SCR Technology   

Navistar’s lobbying efforts relating to engine certification ultimately were unsuccessful.  

The EPA did not give Navistar a Certificate for the 0.2 NOx standard in response to any of 

Navistar’s applications using its EGR-only technology.  

In July 2012, Navistar announced a change to its emissions strategy, stating that it would 

begin using SCR technology as part of its emissions strategy and that it was withdrawing its 

application pending before the EPA for certification of a 0.2 NOx engine using EGR-only 

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technology.  In 2013, Navistar obtained an EPA Certificate for a 0.2 NOx engine that relied in 

part on SCR technology, some of which it had purchased from one of Navistar’s competitors. 

 
II. ARGUMENT 

Navistar’s improper privilege claims are impacting the SEC staff’s investigation to 

determine what, if any, violations of the securities laws have occurred.  Therefore, the SEC now 

asks this Court to compel Navistar to produce documents that Navistar improperly has redacted 

and withheld as privileged. 

A. This Court is Empowered to Grant the Relief Sought 

As a threshold matter, it is well-established that this Court has jurisdiction and the 

authority to compel Navistar to comply with the SEC’s subpoenas.  Section 22(b) of the 

Securities Act and Section 21(c) of the Exchange Act give district courts jurisdiction over 

subpoena enforcement actions.  See 15 U.S.C. § 77v(b); 15 U.S.C. § 78u(c).  The SEC is 

permitted to commence subpoena enforcement actions upon application in any jurisdiction.7  

Courts have previously awarded relief to the SEC in subpoena enforcement actions in a variety of 

contexts, see, e.g., SEC v. Shanahan, 504 F. Supp. 2d 680 (E.D. Mo. 2007) (subpoena 

enforcement action to compel respondent to either produce documents and testify or assert the 

Fifth Amendment privilege), including a subpoena enforcement action brought to compel 

                                                 
7 Although this subpoena enforcement action concerns non-parties ASGK, Alston & Bird, Mayer Brown, 
and Williams & Jensen, in addition to Navistar, the SEC and Navistar are the only necessary parties to 
this action.  Navistar has asserted control over these non-parties’ privilege claims by deciding which 
documents from these productions would be redacted or withheld as privileged.  See DeGeer v. Gillis, 
755 F. Supp. 2d 909, 924 (N.D. Ill. 2010) (client had control over law firm’s database); Ivy Hotel San 
Diego, LLC v. Houston Casualty Co., 2011 WL 4914941 at *9-*10 (S.D. Cal. 2011) (client had control of 
law firm’s client files); Cf. Hobley v. Burge, 433 F.3d 946 (7th Cir. 2006) (noting that law firm had 
independent privacy interest in work product documents where client had not attempted to exercise 
control over privilege claims).  Conversely, these non-parties have ceded any control they might 
otherwise have had over privilege claims by permitting Navistar to determine the documents over which 
privilege claims would be asserted.   

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production of documents withheld on the basis of the attorney-client privilege and work product 

doctrine.  See SEC v. Chesnoff, 2006 WL 2052371 (N.D. Tex. July 18, 2006).  

B. The Attorney-Client Privilege and Work Product Doctrine  Are Narrowly 
Construed 
 

Because documents and information that are redacted and withheld on the basis of the 

attorney-client privilege and work product doctrine are “in derogation of the search for the 

truth,” courts narrowly construe the privilege.  U.S. v Evans, 113 F.3d 1457, 1461 (7th Cir. 

1997); see also Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 152 F.R.D. 132, 135 (N.D. Ill. 

1993) (“As the attorney-client and work product privileges obscure the search for the truth, they 

are both narrowly construed by courts...”); McCook Metals L.L.C. v. Alcoa Inc., 192 F.R.D. 242, 

260 (N.D. Ill. 2000) (“Like the attorney-client privilege, the work product doctrine significantly 

restricts the scope of discovery and must be narrowly construed in order to aid in the search for 

truth.”).  As the party seeking to assert the privileges, Navistar bears the burden of establishing 

“all the essential elements” of each privilege claim, and it must do so on a “question-by-

question” or “document-by-document” basis.  U.S. v. White, 950 F.2d 426, 430 (7th Cir. 1991); 

Sprecher v. Graber, 716 F.2d 968, 973 (2d Cir. 1983) (stating that respondent in SEC 

enforcement action bears the burden of proving the applicability of the privilege).  

C. The Attorney-Client Privilege Only Applies to Communications Necessary for 
the Giving or Seeking of Legal Advice 
 

 As one court in this District recently stated: 

It cannot be too strongly emphasized that the lawyer-client relationship, 
itself, ‘does not create a cloak of protection which is draped around all 
occurrences and conversations which have any bearing, direct or indirect, 
upon the relationship of the attorney with his client.’  In re Carl Walsh, 
623 F.2d 489, 494 (7th Cir. 1980).  Thus, merely communicating with a 
lawyer or copying a lawyer on an otherwise non-privileged 
communication, will not transform the non-privileged communications or 
attachment into a privileged one.  And that is so even if the otherwise non-

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privileged communication was at the behest of a lawyer. 
 

Lee v. Chicago Youth Centers, 2014 WL 2618537 at * 4 (N.D. Ill. June 10, 2014) (citation 

omitted); accord Kleen Prods. v. Int’l Paper, 2014 WL 6475558 at *2 (N.D. Ill. Nov. 12, 2014) 

(rejecting privilege claims over certain documents involving attorneys and noting that “many of 

the exemplar documents that were provided to the Court contain no legal advice at all” even 

where an attorney was a recipient of the document). 

 With respect to attorney-client communications, the attorney-client privilege “protects 

only those disclosures necessary to obtain informed legal advice which might not have been 

made absent the privilege,” In re Carl Walsh, 623 F.2d 489, 494 (7th Cir. 1980).  For the 

attorney-client privilege to apply, the legal advice must be the “predominant element” in the 

communication, and the privilege does not apply “where the legal advice is incidental to business 

advice.”  Allendale, 152 F.R.D. at 137; see also Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577, 582 

(7th Cir. 1981) (“Only where the document is primarily concerned with legal assistance does it 

come within [the attorney-client and/or work-product] privileges; technical information is 

otherwise discoverable.”).    

D. The Work Product Doctrine Only Applies to Documents Created Because of the 
Prospect of Litigation 
 

 In the Seventh Circuit, the test to determine whether materials are protected by the work 

product doctrine is “whether, in light of the nature of the document and the factual situation in 

the particular case, the documents can fairly be said to have been prepared or obtained because 

of the prospect of litigation.”  Binks Manufacturing Co. v. Nat’l Presto Indus., 709 F.2d 1109, 

1119 (7th Cir, 1983).  For work product protection to apply, the “primary motivating purpose” 

behind a document’s creation must be to aid in pending or future litigation.  See Rawat v. 

Navistar Int’l Corp., 2010 WL 1417840 at *7-*8 (N.D. Ill. Apr. 7, 2010) (holding that in 

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connection with a different matter, Navistar improperly asserted work product doctrine over 

withheld documents).  Further, “the mere fact that litigation does eventually ensue does not, by 

itself, cloak materials prepared by an attorney with the protection of the work product privilege; 

the privilege is not that broad.”  Binks, 709 F.2d at 1118.  Even “a plethora of pending law suits 

as well as on-going law suits” is not substantial enough to establish that documents were 

prepared in anticipation of litigation and protected by the work product doctrine.  In re Bank One 

Secur. Litig., 209 F.R.D. 418, 425-26) (N.D. Ill. 2002) (documents prepared by bank as the result 

of a government inquiry arose from the evolution of the bank’s business activities and were not 

protected by the work product doctrine.) 

E. Navistar Improperly Has Asserted Privilege Over the Lobbying and/or 
Communications Firms’ Documents 

 
The SEC challenges Navistar’s assertion of privilege over each of the documents listed 

on the Lobbying and Communications Firms’ privilege logs, as well as documents on  Navistar’s 

own privilege logs relating to communications with these firms.  (See Entry Nos. 44-45, 55-67 

on Navistar’s 11/5/14 Privilege Log of Withheld Documents; Entry Nos. 1-3, 12, 14-15 of 

Navistar’s 11/10/14 Privilege Log of Redacted Documents).  The SEC requests that the Court 

order Navistar to provide the Court with all non-duplicative copies of all of these documents in 

unredacted form for the Court’s in camera review, and, for redacted documents, to indicate to the 

Court what portion of each document has been redacted as privileged.  The Court should then 

conclude that these documents are non-privileged and order Navistar to produce them. 

 
1. Neither the Attorney-Client Privilege Nor Work Product Doctrine Applies to 

Communications Involving Public Affairs and Communications Consultant 
ASGK 

 
In response to the SEC’s subpoena to ASGK, Navistar has redacted portions of 88 

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documents8 and entirely withheld an additional 75 documents on privilege grounds.  

Additionally,  Navistar withheld 7 documents in response to the SEC’s subpoena to Mayer 

Brown involving communications with ASGK that ASGK did not produce in response to the 

SEC’s subpoena and that were not listed on ASGK’s privilege log.  (See Mayer Brown LLP 

Privilege Log Entry Nos. 51-54, 175, 184, 190)  Navistar has asserted both the attorney-client 

privilege and the work product doctrine as to most of the communications involving ASGK, and 

Navistar has asserted just the work product doctrine as to the remainder.   

There is no privilege that applies to documents involving ASGK.   

a. Communications Including ASGK Neither Involve The Giving or Seeking 
of Legal Advice Nor Were Created in Anticipation of Litigation 
 

First, because ASGK was acting in a public affairs and communications consulting 

capacity for Navistar, not in a legal capacity, any communications including ASGK do not 

involve the seeking or giving of legal advice to Navistar.  Accordingly, the attorney-privilege 

does not apply.  See, e.g., McNamee v. Clemens, 2013 WL 6572899 at *5-*7 (E.D.N.Y. Sept. 18, 

2013) (communications involving public relations firm and sports agency were not necessary for 

attorney to provide legal advice, and, therefore, were not protected by attorney-client privilege); 

In re Prograf Antitrust Litig., 2013 WL 1868227 at *2-*3 (D. Mass. May 3, 2013) 

(communications between company or its outside counsel and public relations firm were not 

covered by attorney-client privilege); LG Electronics U.S.A., Inc. v. Whirlpool Corp., 661 F. 

Supp. 2d 958, 967 (N.D.Ill. 2009) (attorney-client privilege did not apply to communications 

involving third-party advertising agencies); Flagstar Bank  v. Freestar Bank, 2009 WL 2706965 

at *5-*6 (N.D. Ill. Aug. 25, 2009) (communications involving firm providing branding and 

marketing services were not covered by attorney-client privilege).   
                                                 
8 Most of these documents are different copies of a single email that Navistar has redacted, contained in 
various email strings in the electronic mailboxes of various ASGK custodians. 

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Likewise, communications involving a public affairs and communications consultant 

such as ASGK were not prepared in anticipation of litigation, and therefore the work product 

doctrine is inapplicable to such communications.  See McNamee, 2013 WL 6572899 at *8 (work 

product doctrine did not apply to communications that dealt with strategizing about effects of 

litigation on the media or public generally, as opposed to strategizing about conduct of litigation 

itself); Prograf, 2013 WL 1868227 at *3 (communications involving public relations firms were 

not work product);  LG Electronics, 661 F. Supp. 2d at 967 n.3 (work product doctrine did not 

protect communications with third-party advertising agencies where the communications did not 

refer to on-going litigation and did not constitute documents prepared in anticipation of 

litigation). 

As an example of Navistar’s improper privilege assertions over documents responsive to 

the SEC’s subpoena to ASGK, Navistar asserted both the attorney-client privilege and work 

product doctrine over a portion of a document that ASGK simultaneously produced in redacted 

and unredacted form.9  Navistar redacted as privileged the portion of a May 17, 2012 email from 

ASGK employee Kathleen Cantillon to several ASGK, Navistar, and other non-attorneys entitled 

“Next Steps” in which Cantillon stated that Navistar media relations employee Karen Denning 

would reach out to Navistar lawyer Laurence Levine (who at all relevant times has worked for 

Navistar under a full-time retainer agreement) about a certain topic.  (ASGK-NAV-E-00003568) 

(part of Entry 43 on Navistar’s Redacted Documents ASGK Privilege Log).10  Because Navistar 

did not retain third-party ASGK to facilitate the giving or seeking of legal advice or to assist with 

                                                 
9 The SEC staff alerted Navistar’s counsel after discovering the unredacted versions of this document in 
ASGK’s production, and Navistar’s counsel responded by asserting that the unredacted versions were 
privileged and inadvertently produced.  
10 The SEC is not discussing the content of the redacted portion in further detail in this memorandum 
because of Navistar’s claim of privilege.  But the document is part of the group of documents that the 
SEC is requesting the Court review in camera and then order Navistar to produce in unredacted form. 

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litigation strategy, ASGK’s discussion of what Denning was planning to discuss with Levine is 

not protected by either the attorney-client privilege or work product doctrine.  Further, the 

content of the redacted portion of the email is nothing more than a description of the general 

subject matter of a planned consultation with an attorney, which is not privileged.  See, e.g., 

Knox Energy v. Gasco Drilling, 2014 WL 4052806 at *3 (W.D. Va. Aug. 14, 2014) (“The 

overwhelming authority from around the country is that the subject matter of an attorney-client 

communication is not privileged.”); In re Mortgage Store, 509 B.R. 292, 299 (Bankr. D. Haw. 

2014) (“Most of the redacted information describes the general subject matter of a 

communication.  This is not privileged and must usually be revealed in a privilege log.”) 

b. Navistar Waived Any Privileges on Documents in Which It Included 
ASGK as a Third-Party Participant 
 

Second, if Navistar included ASGK on communications that otherwise would be 

privileged, Navistar waived the privileges by including ASGK as a participant.  See, e.g., Hill v. 

State Street Corp., 2013 WL 6909524 at *3-*5 (D. Mass. Dec. 30, 2013) (company waived 

attorney-client privilege where documents were shared with investment and governance 

consultant); BSP Software v. Motio, 2013 WL 3456870 at *2-*5 (N.D. Ill. July 9, 2013) 

(company waived attorney-client privilege over emails which company disclosed to third-party 

advisory board); Jackson v. Deen, 2013 WL 1911445 at *10-*13 (S.D. Ga. May 8, 2013) 

(defendants waived claims of attorney-client privilege and work product doctrine over 

documents shared with agent and business adviser, business consultant, and marketing and 

public relations firm).   

Assuming arguendo that Navistar did not waive any applicable privileges by including 

ASGK the firm in communications, Navistar waived the privilege over communications in which 

Navistar widely disseminated the communications to ASGK employees.  (E.g., ASGK Redacted 

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Documents Privilege Log Entry Nos. 2, 49, 52 (emails from Navistar to seven ASGK 

employees)).  A company waives privilege by disclosing documents to employees whose access 

to them is unrelated to the purposes underlying the privilege.  See, e.g., PSK v. Hicklin, 2010 WL 

2541795 at *4-*5 (N.D. Iowa June 22, 2010) (company waived privilege by including several 

employees in communications in addition to attorney); ePlus, Inc. v. Lawson Software, 280 

F.R.D. 247, 257 (E.D. Va. 2012) (waiver of attorney-client privilege over 8 documents 

distributed to ten non-attorneys); Traficante v. Homeq Servicing Corp., 2010 WL 3167435 at *2 

(W.D. Pa. Aug. 10, 2010) (waiver of privilege where company gave access to low level 

employees); accord Baxter Travenol Labs. v. Abbott Labs., 1987 WL 12919 at *5 (N.D. Ill. June 

19, 1987). 

c. Communications Involving Only Non-Attorney ASGK Employees 
Presumptively Are Non-Privileged 
 

Finally, with respect to the majority of communications on Navistar’s ASGK privilege 

logs, no privilege attaches to the communications because no attorneys were involved in the 

communications.  Of the 88 entries on the ASGK Redacted Documents Privilege Log, 86 of 

those entries relate to communications involving only non-attorneys,11 and of the 75 entries on 

ASGK Withheld Documents Privilege Log, 58 of those entries relate to communications 

involving only non-attorneys.    

“A communication between non-lawyers is generally not protected under the attorney-

client privilege unless the ‘dominant intent is to prepare the information in order to get legal 

advice from the lawyer.’”  In re Behr Dayton Thermal Prods., 298 F.R.D. 369, 375 (S.D. Ohio 

2013) (quoting Comtide Holdings, LLC v. Booth Creek Mgmt. Corp., 2010 WL 5014483 at *2-

                                                 
11 As noted above, most of these 88 documents are different copies of a single email that Navistar has 
redacted, contained in various email strings in the electronic mailboxes of various ASGK custodians. 
 

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29 
 

*3 (S.D. Ohio Dec. 3, 2010)).  Although there may exist a “rare occasion that attorney-client 

protection may be established without direct attorney communication”, Black & Veatch Corp. v. 

Aspen Ins. (UK) Ltd., 297 F.R.D. 611, 620-621 (D. Kan. 2014), “substantial proof” is required to 

show that a communication between non-lawyers is privileged.  Behr, 298 F.R.D. at 375; cf. 

Wierciszewski v. Granite City Illinois Hosp. Co., 2011 WL 5374114 at *1-*2 (S.D. Ill. Nov. 7, 

2011) (emails between employee of company and his supervisor regarding investigation of and 

determination to ultimately terminate the plaintiff’s employment were non-privileged). 

Likewise, the fact that a communication involved only non-lawyers weighs against a 

finding of work product protection.  Cf. In re Chase Bank USA, N.A. Check Loan Contract Litig., 

2011 WL 3268091 at *5 (N.D. Cal. July 28, 2011) (holding that neither attorney-client privilege 

nor work product doctrine applied to communication between non-attorneys).  

In this case, there is nothing to indicate that Navistar properly has asserted privilege over 

any of the over 140 communications among non-attorneys that Navistar has either redacted or 

withheld as privileged in response to the SEC’s subpoena to ASGK.  Navistar engaged ASGK as 

a public affairs and communications consultant to help Navistar pressure the EPA to certify a 

Navistar engine at 0.2 NOx and to deal with the fallout if Navistar was unsuccessful in obtaining 

a Certificate.  Navistar did not use ASGK to seek or receive legal advice or to develop a 

litigation strategy.  Therefore, communications among ASGK employees (none of whom are 

attorneys), or between non-attorney Navistar employees and ASGK, are subject to the general 

presumption that communications among only non-attorneys are non-privileged. 

2. Communications Involving Lobbying Firm Alston & Bird Are Not Privileged 

a. Alston & Bird Provided Lobbying Services, Not Legal Services, To 
Navistar 

 
Navistar has withheld 316 documents as privileged in response to the SEC’s subpoena to 

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30 
 

Alston & Bird, asserting that Alston & Bird was providing legal advice to Navistar.  But Alston 

& Bird functioned as a lobbying firm for Navistar, not a law firm. 

The term “lobbyist” is defined under federal law.  The LDA defines a “lobbyist” as any 

individual who (with exceptions) is “employed or retained by a client” for services that include 

making “lobbying contact[s].”  2 U.S.C. § 1602(10); see Nat’l Ass’n of Manufacturers v. Taylor, 

582 F.3d 1, 7 n.2 (D.C. Cir. 2009).  The LDA defines a “lobbying contact” as (with exceptions) a 

communication to a covered legislative or executive branch official with regard to the 

“formulation, modification, or adoption” of, among other things, federal legislation, regulations, 

or policies.  Id. at § 1602(8)(A); Taylor, 582 F.3d at 7 n.2.  “Lobbying activities” under the LDA 

are defined as “lobbying contacts and efforts in support of such contacts, including preparation 

and planning activities, research and other background work that is intended, at the time it is 

performed, for use in contacts, and coordination with the lobbying activities of others.”  Id. at § 

1602(7); Taylor, 582 F.3d at 7 n.2.   

Alston & Bird provided lobbying services for Navistar.  The non-privileged documents 

that Alston & Bird produced in response to the SEC’s subpoena show that the firm made 

contacts with various public officials to encourage those officials to influence the EPA to issue a 

Certificate to Navistar.  This is a quintessential lobbying activity under the definition of 

“lobbyist” in the LDA and under any common-sense notion of what a lobbyist does.  The fact 

that Alston & Bird and three of its partners registered as lobbyists under the LDA for this work 

for Navistar confirms that Alston & Bird considered itself to be doing lobbying work for 

Navistar.  Moreover, both lawyers and non-lawyers at Alston & Bird performed this work, 

underscoring that Alston & Bird’s work for Navistar was not legal in nature.   

b. Communications or Notes Involving Alston & Bird, Acting as a 
Lobbying Firm, Are Not Privileged 

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31 
 

 
Because Alston & Bird performed lobbying work for Navistar, not legal work, 

communications involving Alston & Bird are protected by neither the attorney-client privilege 

nor the work product doctrine.  These privileges are not implicated when a law firm or a lawyer 

performs lobbying services to a client.  See, e.g., A&R Body Specialty and Collision Works v. 

Progressive Casualty Ins. Co., 2014 WL 657688 at *3 (D. Conn. Feb. 20, 2014) (emails from 

lobbyist-attorney to clients “are not protected by the attorney-client privilege as they do not 

provide analysis or interpretation of legislation, and are more in the nature of general lobbying 

activity updates”); In re Application of Chevron Corp., 749 F. Supp. 2d 141, 165-66 (S.D.N.Y. 

2010) (neither attorney-client nor work product privilege applies to a activities relating to 

lobbying, media and public relations, and political activism); In re Bisphenol-A (BPA) 

Polycarbonate Plastic Prods. Liab. Litig., 2011 WL 1136440 at *3 (W.D. Mo. Mar. 25. 2011) 

(“JPMA asserts the privilege with respect to advice regarding lobbying, public relations, dealing 

with the media, and other non-privileged matters.  Advice on these topics is not privileged, even 

if the advice comes from an attorney.”); cf. Evans v. City of Chicago, 231 F.R.D. 302, 312 (N.D. 

Ill. 2005) (documents concerning advice on political, strategic, or policy issues not privileged) 

(citing In re Lindsey, 148 F.3d 1100, 1106 (D.C. Cir. 1998)).   

In discussions with the SEC staff, Navistar has asserted that Alston & Bird’s engagement 

letter with Navistar (which Navistar improperly has redacted)12 confirms that Alston & Bird 

provided legal services to Navistar.  But “an engagement letter cannot reclassify non-privileged 

communications as ‘legal services’ in order to invoke the attorney-client privilege”.  Sandra T.E. 

v. South Berwyn School District 100, 600 F.3d 612, 620 (7th Cir. 2010) (citing Burden-Meeks v. 

                                                 
12 See, e.g., U.S. v. Hatfield, 2009 WL 3806300 at *12 (E.D.N.Y. Nov. 13, 2009) (law firm engagement 
letters are not privileged; Newmarkets Partners LLC v. Sal. Oppenheim Jr. & Cie. S.C.A., 258 F.R.D. 95, 
103 (S.D.N.Y. 2009) (same). 

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32 
 

Welch, 319 F.3d 897, 899 (7th Cir. 2003)).  Indeed, courts that have considered whether attorneys 

are acting in a lobbying capacity versus a legal capacity have analyzed the issue without regard 

to what engagement letters may have said.  See, e.g., A&R Body, 2014 WL 657688 at *3 (no 

mention of engagement letter in analysis); Chevron, 749 F. Supp. 2d at 165-66 (same).  Thus, the 

engagement letter has little relevance where other evidence establishes that Alston & Bird acted 

in a lobbying capacity for Navistar, not a legal capacity.13 

Alston & Bird’s communications with Navistar – many of which involve the “status of 

communications with the EPA and the administration” and the like (see, e.g., Alston & Bird 

Privilege Log Entry Nos. 4-9, 20-21, 35-39, 46-57) – are precisely the sorts of communications 

that courts have held not be privileged because the communications relate to lobbying activities, 

not legal activities.  This Court should adopt the reasoning in prior cases involving lawyer-

lobbyists and hold that communications involving Alston & Bird are not privileged. 

c. Even Assuming That Alston & Bird Was Acting as a Law Firm, Not 
All Communications With Alston & Bird Are Privileged 

 
Even if Alston & Bird was acting as a law firm, rather than a lobbying firm, this does not 

mean that every substantive communication involving Navistar and Alston & Bird is privileged.   

Communications involving Navistar and Alston & Bird such as updates on the status of 

Navistar’s discussions with the EPA are non-privileged, even if the Court were to find that 

Alston & Bird acted in a legal capacity for Navistar.  These communications, many of which 

Navistar engaged in with both lawyers and non-lawyers, and with law firms and non-law firms, 

                                                 
13 Although the Seventh Circuit stated in Sandra T.E. that the engagement letter “should have been the 
most important piece of evidence” in that case, Sandra T.E., 600 F.3d at 619, that case was “very fact-
specific.”  See Wartell v. Purdue Univ., 2014 WL 4261205 at *7 (N.D. Ind. Aug. 28, 2014) 
(distinguishing Sandra T.E.).  Among other things, Sandra T.E. had nothing to do with whether attorneys 
acted in a lobbying capacity or a legal capacity, which is one of the key questions here.  Instead, Sandra 
T.E. involved a law firm’s assertion of privilege over its notes and internal memoranda relating to its 
internal investigation of claims that an elementary school teacher sexually abused students. 

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are not communications necessary for Navistar to obtain informed legal advice or to assist in 

developing litigation strategy.  There is no legal advice sought or obtained in such 

communications.  They do not discuss litigation or litigation strategy.  Therefore, even assuming 

that lawyers, acting in a legal capacity, are involved in the communications, the communications 

are not privileged.  See e.g., Lee, 2014 WL 2618537 at *6-*8 (finding that certain substantive 

communications between lawyer and client were non-privileged); Evans, 231 F.R.D. at 312-315 

(same); U.S. ex. rel. Fields v. Sherman Health Sys., 2004 WL 905934 at *1-*2 (N.D. Ill. April 

28, 2004) (same). 

3. Communications or Notes Involving Lobbyist Tyrone Fahner of Mayer 
Brown Are Not Privileged 

 
 Navistar has withheld 193 documents as privileged in response to the SEC’s subpoena to 

Mayer Brown.  All of these documents are communications involving Mayer Brown partner 

Tyrone Fahner relating to Navistar or Fahner’s notes relating to Navistar. 

 This Court should analyze the Mayer Brown documents in dispute in the same manner as 

the Alston & Bird documents and conclude that none of the Mayer Brown documents are 

privileged.  Like the Alston & Bird lawyers and non-lawyers who provided services to Navistar, 

Mayer Brown’s Fahner provided lobbying services, not legal services, to Navistar.  The 

descriptions of Fahner’s communications relating to Navistar on Mayer Brown’s privilege log – 

such as communications “regarding the status of communications with the White House,” (e.g., 

Mayer Brown Privilege Log Entry 57, 102-03) and the like – are similar to the descriptions on 

Alston & Bird’s privilege log.  These entries indicate that, like Alston & Bird, Mayer Brown 

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34 
 

acted as a lobbyist for Navistar to persuade EPA officials to issue a Certificate to Navistar and to 

encourage other public officials to pressure the EPA to do so.14   

 The testimony of Navistar’s Director of Government Relations, Brien Sheahan, and Vice-

President of Government Relations, Patrick Charbonneau, as well as the non-privileged email 

communication discussing Fahner’s lobbying of EPA officials in or around January 2012, further 

indicate that Mayer Brown and Fahner were acting as lobbyists for Navistar.  Conversely, there 

is nothing to indicate that Fahner was involved in developing litigation strategy, analyzing 

legislation, or otherwise providing legal services for Navistar.  Because Mayer Brown and 

Fahner performed lobbying services for Navistar, not legal services, none of Fahner’s 

communications or notes are protected by the attorney-client privilege or work product doctrine.    

 Further, even if Mayer Brown and Fahner were acting in a legal capacity for Navistar, not 

all attorney-client communications would be privileged because not all involved the giving or 

seeking or legal advice or the formulation of litigation strategy.  See Lee, 2014 WL 2618537 at 

*6-*8; Evans, 231 F.R.D. at 312-315; Fields, 2004 WL 905934 at *1-*2; Allendale, 152 F.R.D. 

at 137. 

 Additionally, assuming arguendo that communications with Fahner and Navistar are 

privileged in the first instance, no privilege applies to communications that were disclosed to 

third-parties such as ASGK (see Mayer Brown LLP Privilege Log Entry Nos. 51-54, 175, 184, 

190) and/or Alston & Bird (id. at Entry Nos. 1, 3-5, 7, 9-13 15-25, 27, 29, 31-36, 110, 131-139, 

141, 144, 177, 179-80, 185-87, 191), or communications involving many other individuals unless 

                                                 
14 Unlike Alston & Bird, Mayer Brown and Fahner do not appear to have registered as lobbyists for 
Navistar.  But this is not dispositive.  First, the LDA does not require all lobbyists to register.   See 2 
U.S.C. § 1602(10); Autor v. Pritzker, 740 F.3d 176, 179 (D.C. Cir. 2014).  Second, Mayer Brown and 
Fahner may have failed to register.  Courts have found lawyers to have acted as lobbyists without 
evidence that the lawyers registered as such. See, e.g., A&R Body, 2014 WL 657688 at *3; Chevron, 749 
F. Supp. 2d at 165-66. 

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35 
 

Navistar can show that each and every individual involved in the communication was necessary 

for the giving or seeking of legal advice or formulation of litigation strategy.  (Id. at Entry Nos. 

1, 3-5, 7, 9-13 15-25, 27, 29, 31-36, 79-80, 110, 119-20, 131-139, 141, 144, 177, 179-80, 185-87, 

191).  The SEC incorporates by references its arguments in Sections II.E.1 to II.E.2 above with 

regard to these points. 

4. Communications Involving Lobbying Firm Williams & Jensen Are Not 
Privileged 

 
For the Williams & Jensen production, Navistar has asserted privilege over seven 

documents that Navistar listed on a privilege log, and Navistar asserted privilege over 

approximately 31 additional documents that Navistar has not yet listed on a privilege log for the 

Williams & Jensen production.  As with Alston & Bird and Mayer Brown, Williams & Jensen 

performed lobbying work for Navistar, not legal work.  Indeed, although Williams & Jensen is a 

law firm, it does not appear that any Williams & Jensen lawyers performed work for Navistar 

relating to engine certification issues, as opposed to Williams & Jensen non-lawyers such as 

Beer.  Because Williams & Jensen was a lobbyist for Navistar, and because Navistar’s retention 

of Williams & Jensen was not necessary for Navistar’s lawyers to communicate with Navistar or 

develop litigation strategy, communications involving Williams & Jensen are not privileged.  

This Court should order Navistar to produce the documents that Navistar improperly has 

withheld as privileged from Williams & Jensen’s document production. 

As examples of Navistar’s improper privilege assertions, Navistar asserted privilege over 

several documents that Williams & Jensen produced but that Navistar clawed back after the SEC 

staff alerted Navistar based on the listing of these documents on other parties’ privilege logs.  

The documents that Navistar clawed back as privileged mainly consisted of updates from 

Charbonneau on the status of Navistar’s discussions with the EPA over certification issues.  

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36 
 

(E.g., SEC-WandJ-E-0006858, SEC-WandJ-E-0006896-97, SEC-WandJ-E-0006862)  Even 

assuming that Williams & Jensen and the other recipients of these updates from Charbonneau 

were acting in a legal capacity when they received the updates – which they were not – these 

status updates are not privileged.  See, e.g., Digital Vending Services Int’l v. The University of 

Phoenix, 2013 WL 1560212 at *6 (E.D. Va. April 12, 2013) (“These communications are simply 

status updates and no legal advice is given by counsel.  Therefore, these communications are not 

privileged.”) 

F. Navistar Improperly Has Asserted Privilege Over Internal Navistar Non-
Attorney Communications 

 
 In addition to improperly asserting privilege over communications involving lobbyists, 

Navistar also has improperly asserted privilege over internal Navistar communications involving 

only non-attorneys, including non-attorney notes.  Although rare occasions may exist in which 

non-attorney communications are privileged, there is nothing to indicate that Navistar has 

asserted a valid claim of privilege over the thousands of communications involving non-

attorneys listed on Navistar’s privilege logs.  See, e.g., Behr, 298 F.R.D. at 375 (holding that 

communications involving only non-attorneys were non-privileged); Black & Veatch, 297 F.R.D. 

at 620-621 (occasions in which attorney-client protection applies to non-attorney 

communications are “rare”).  Even if an attorney is referenced in these communications, the 

communications may be non-privileged because, for example, the communications do not reveal 

advice received or sought from an attorney, or the advice sought or received from an attorney 

constitutes predominately business or political advice rather than legal advice. See Lee, 2014 WL 

2618537 at * 4; Evans, 231 F.R.D. at 312-315; Fields, 2004 WL 905934 at *1-*2;  

 The large volume of non-attorney communications redacted and withheld by Navistar 

makes it impractical for the Court to conduct an in camera review of all such documents.  The 

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37 
 

SEC is requesting that the Court conduct an in camera review of a subset of the non-attorney 

communications over which privilege disputes between Navistar and the SEC remain.  Although 

the SEC is not requesting that the Court definitively determine the validity of Navistar’s 

privilege claims as to every document that remains in dispute, the SEC is hopeful that with 

respect to remaining privilege disputes, Navistar will follow the Court’s guidance in its 

resolution of this subpoena enforcement action.  By asking the Court to conduct an in camera 

review of a subset of disputed non-attorney communications, the SEC is attempting to conserve 

Court resources and obviate the need for further Court intervention with regard to other privilege 

disputes between Navistar and the SEC.15  

 In Exhibit X attached hereto, the SEC has identified the non-attorney communications 

that it is requesting the Court review in camera and order Navistar to produce. 

G. Navistar Improperly Has Asserted Privilege Over Draft SEC Filings And 
Communications Regarding Those Filings 
 
1. Draft SEC Filings or Communications Regarding Those Filings Do Not 

Constitute Work Product 
 

 Navistar has redacted and withheld certain draft SEC filings, and communications 

regarding those filings, in response to the SEC’s subpoenas to Navistar.  For several of the draft 

SEC filings, and communications regarding those filings, Navistar has invoked the work product 

doctrine.   

 Navistar’s assertion of the work product doctrine over draft SEC filings, and 

communications regarding those filings, is inappropriate.  Navistar did not prepare draft SEC 

                                                 
15 Courts deciding privilege disputes sometimes articulate guidelines governing the court’s resolution of 
the disputes.  See, e.g., Hill, 2013 WL 6909524 at *1 (“[t]he parties further agreed that they would use the 
court’s guidance at argument and in this decision to govern their positions at the upcoming depositions”); 
In re Vioxx Prods. Liab. Litig., 501 F. Supp. 2d. at 809 (“[I]n our assessment of [privilege] claims, we 
established guidelines to ensure consistency in rulings for recurring types and formats of 
communications.”) 

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38 
 

filings, such as Forms 10-Q and 10-K, in anticipation of litigation; rather, Navistar prepared the 

filings because SEC disclosure rules required a public company such as Navistar to make the 

filings.  Because Navistar would have drafted SEC filings regardless of threatened or actual 

litigation, the work product doctrine is inapplicable to these drafts, or communications regarding 

those drafts.  See, e.g., RBS Citizens v. Husain, 291 F.R.D. 209, 220-21 (N.D. Ill. 2013) 

(spreadsheets consisting of loan risk analyses and financial forecasts were not work product); 

Rawat, 2010 WL 1417840 at *8 (documents created by Navistar to ensure compliance with SEC 

rules and regulations were not work product); Resurrection Healthcare and Factory Mut. Ins. 

Co. v. GE Health Care, 2009 WL 691286 at *2-*3 (N.D. Ill. Mar. 16, 2009) (interviews, 

statements, and documentation regarding spill were not work product); Bank One Secur. Litig., 

209 F.R.D. at 425-26 (documents created as a result of  regulatory inquiry were not work 

product). 

2. The Attorney-Client Privilege Does Not Protect the Draft SEC Filings 
Redacted and Withheld by Navistar  

 
 Draft SEC filings, and communications regarding those filings, that Navistar has 

withheld are not covered by the attorney-client privilege.  Courts within this District have held 

that draft SEC filings are not privileged.  In re JPMorgan Chase & Co. Secur. Litig., 2007 WL 

2363311 at *3 (N.D. Ill. Aug. 13, 2007) (draft SEC filings are not privileged); Christman v. 

Brauvin Realty Advisors, Inc., 185 F.R.D. 251, 256 (N.D. Ill. 1999) (same); but see Roth v. Aon 

Corp., 254 F.R.D. 538, 540-41 (N.D. Ill. 2009) (certain draft SEC filings can be privileged).   

 Even if the Court holds that, as a general matter, certain draft SEC filings can be 

privileged, Navistar’s withholding of draft SEC filings, and communications regarding those 

filings, from its productions in this investigation is improper.  First, some of the draft SEC filings 

are attached to communications among only non-attorneys, and there is no indication that 

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39 
 

Navistar has properly asserted the attorney-client privilege over such non-attorney 

communications.  (See Section II.F., supra). 

 Second, to the extent communications attaching draft SEC filings include one or more 

attorneys, the attorneys were among many recipients of those communications.  Where Navistar 

distributed these draft filings widely to attorneys and non-attorneys, Navistar was not primarily 

seeking or obtaining legal advice in distributing the filings.  See United Food and Commercial 

Workers Union v. Chesapeake Energy Corp., 2012 WL 2370637 at *10-*11 (W.D. Okla. June 

22, 2012) (“final versions of publicly disseminated documents which were distributed to the 

attorney as well as other corporate officers or employees, without soliciting legal advice or 

comment or approval, would not be privileged.”); Freeport-McMoran Sulphur, LLC v. Mike 

Mullen Energy Equipment Resource, Inc., 2004 WL 1299042 at *6-*7 (E.D. La. June 4, 2004) 

(“[e]ven though the draft [press] release was forwarded to [an attorney] for review and comment, 

the document was also forwarded to several other company executives and/or employees for 

review and comment.”); Cf. In re Vioxx Prod. Liab. Litig., 501 F. Supp. 2d 789, 809 (E.D. La. 

2007) (communications involving both attorneys and non-attorneys are not privileged); 

Preferred Care Partners Holding Corp. v. Humana, Inc., 258 F.R.D. 684, 689 (S.D. Fla. 2009) 

(same); In re Avandia Marketing, Sales Practices and Prod. Liab., 2009 WL 4807253 at *4 

(E.D. Pa. Oct. 2, 2009) (document sent to 12 non-attorneys and 1 attorney was not privileged).  

The distribution of the drafts to a few attorneys, among many others, does not make the drafts 

privileged.  See Lee, 2014 WL 2618537 at *6-*7 (holding that certain communications between 

an attorney and client were not privileged); Evans, 231 F.R.D. 312-16 (same); Kleen Prods., 

2014 WL 6475558 at *1 (“courts in this District have held that ‘[w]here a document is prepared 

for simultaneous review by legal and nonlegal personnel and legal and business advice is 

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40 
 

requested, it is not primarily legal in nature and is therefore not privileged.’”) (quoting RBS 

Citizens, 291 F.R.D. at 216)). 

 As an example of Navistar’s improper privilege assertions over draft SEC filings, and 

communications regarding those filings, Navistar redacted as privileged a portion of a draft press 

release which was to be filed with the SEC and accompany Navistar’s first quarter 2012 Form 

10-Q.  Navistar’s Manager of External Communications, a non-attorney, circulated the draft 

press release to several non-attorneys. (See NAV00115614-NAV00115619 (to be submitted to 

the Court for an in camera review), 2-29-12 email Koc to Klein, Keele, Miller, Campbell; see 

also NAV00115609-NAV00115612; NAV00115620-NAV00115625; NAV00129017-

NAV00129020).  In response, Navistar’s Director of External Reporting and Technical 

Accounting, Donald Klein (“Klein”) another non-attorney, provided comments on the draft, 

including comments on draft language regarding Navistar’s submission to the EPA to obtain a 

Certificate for an engine that met the 0.2 NOx standard.  In Klein’s comments, he stated a need 

for legal input on certain portions of the draft, including portions regarding Navistar’s 

submission to the EPA.  Navistar has claimed privilege over all of Klein’s comments relating to 

Navistar’s submission to the EPA.  (Id.)16 

 Navistar’s redactions of Klein’s comments on this draft press release are improper.  

Klein’s comments are not privileged.  Rather, they are non-privileged comments from one non-

attorney to other non-attorneys on the contents of a draft press release.  Klein’s statement of a 

need for legal input does not change the analysis.  This statement does not disclose the actual 

                                                 
16 Navistar simultaneously produced this document both in redacted and unredacted form.  In a privilege 
log, Navistar asserted both the attorney-client privilege and the work product doctrine over a redacted 
version of the document.  (See 9-20-12 Redacted Documents Privilege Log, p. 10, NAV00016666-
NAV00016668) (erroneously stating a 2011 date).  After the SEC staff alerted Navistar’s counsel about 
the unredacted versions of this document in Navistar’s production, Navistar asserted the attorney-client 
privilege over portions of the unredacted versions of the document.  

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41 
 

content of a confidential attorney-client communication.  Indeed, there is no evidence that any 

attorney-client communication about Klein’s comments ever occurred.  This Court should rule 

that Klein’s comments on the draft press release are not privileged.  See Smithkline Beecham 

Corp. v. Apotex Corp., 193 F.R.D. 530, 538 (N.D. Ill. 2000) (communications between non-legal 

advisors were not privileged). 

 The draft SEC filings redacted and withheld by Navistar, and communications regarding 

those filings, that Navistar has redacted and withheld, and that the SEC is requesting that this 

Court review in camera and order Navistar to produce are: (a) Entry on Navistar 11-5-14 

Privilege Log: Entry No. 37, pp. 49-50, NAVPRIV00006787-NAVPRIV00006791; (b) Entries 

on Navistar 1-19-15 Privilege Log: Entry No. 2, p, 1, NAV00115609-NAV00115612; Entry No. 

3, page 1, NAV00115614-NAV00115619; Entry No. 4, p. 1, NAV00115620-NAV00115625; 

and Entry No. 5, p. 2, NAV00129017-NAV00129020; and (c) NAV00707022-NAV00707135 

and NAV00707136-NAV00707220 (as to which Navistar has not yet listed on a privilege log but 

has stated it intends to do so).   

 While these documents appear to be the only draft SEC filings, or communications 

regarding those filings, that currently remain in dispute between the SEC and Navistar, it appears 

that the parties may continue to have disputes about over SEC filings, or communications 

regarding those filings.  It appears that Navistar has not yet produced or not yet listed on a 

privilege log certain drafts of SEC filings that the SEC is seeking as part of its investigation.  But 

the SEC is hopeful that with respect to possible remaining privilege disputes over draft SEC 

filings, and communications regarding those filings, Navistar will follow the Court’s guidance in 

its resolution of this subpoena enforcement action so as to obviate the need for future Court 

intervention. 

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CONCLUSION 

 For the foregoing reasons, the SEC respectfully requests that the Court grants its First 

Amended Application, conduct an in camera review of the documents identified in this First 

Amended Application and the SEC’s Memorandum in Support, order Navistar to produce the 

documents that Navistar improperly has redacted or withheld as privileged, and award such other 

and further relief as this Court deems just. 

  
 

Dated: January 22, 2015    Respectfully submitted, 
 

UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION 

 
/s/ Eric M. Phillips 
____________________________________ 

       By: One of its Attorneys 
 
 
 
 
Eric M. Phillips (IL Bar No. 6237871) 
Amy Flaherty Hartman (IL Bar No. 6274926) 
Anne Graber Blazek (IL Bar No. 6282987) 
United States Securities and Exchange Commission 
175 West Jackson Boulevard 
Ninth Floor 
Chicago, Illinois 60604 
Telephone:  (312) 353-7390

Case: 1:14-cv-10163 Document #: 23 Filed: 01/22/15 Page 50 of 51 PageID #:238



 
 

CERTIFICATE OF SERVICE 
 
 I, Eric M. Phillips, an attorney, being duly sworn, state on oath that on January 22, 2015, 

I caused the Securities and Exchange Commission’s Memorandum of Law in Support of Its First 

Amended Application for an Order Compelling Compliance with Administrative Subpoenas to 

be served upon the following counsel by the Court’s CM/ECF system: 

Sean M. Berkowitz 
Robin M. Hulshizer 
John J. Sikora, Jr. 
Latham & Watkins LLP 
330 North Wabash Ave., Suite 2800 
Chicago, IL 60611 
 
 
 
 
 
 
 
       /s/ Eric M. Phillips_______________ 
  Eric M. Phillips 

Case: 1:14-cv-10163 Document #: 23 Filed: 01/22/15 Page 51 of 51 PageID #:239