In Re Fannie Mae Securities Litigation

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 10, 2008 Decided January 6, 2009

No. 08-5014

IN RE: FANNIE MAE SECURITIES LITIGATION,

Appeal from the United States District Court
for the District of Columbia
(No. 04cv01639)

Nicholas J. Bagley, Attorney, U.S. Department of Justice,
argued the cause for appellant. With him on the briefs were
Gregory G. Katsas, Assistant Attorney General, Jeffrey A.
Taylor, U.S. Attorney, R. Craig Lawrence and John C.
Truong, Assistant U.S. Attorneys, and Mark B. Stern and
Michael S. Raab, Attorneys. Sarang V. Damle and Mark R.
Freeman, Attorneys, entered appearances.

Alex G. Romain argued the cause for appellees. With
him on the brief were Kevin M. Downey, Steven M. Salky,
Eric R. Delinsky, and David S. Krakoff.

Before: TATEL and KAVANAUGH, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: The Office of Federal Housing
Enterprise Oversight (OFHEO) appeals a district court order
 2
holding it in contempt for failing to comply with a discovery
deadline to which it agreed. Though we appreciate OFHEO’s
efforts to comply, we conclude that it ultimately failed to do
so and find no abuse of discretion in the district court’s
contempt finding or choice of sanction.

I.
Appellant Office of Federal Housing Enterprise
Oversight regulates the Federal National Mortgage
Association (“Fannie Mae”) and the Federal Home Loan
Mortgage Corporation (for some reason “Freddie Mac”)—
both government-sponsored enterprises participating in the
secondary mortgage market. This case concerns OFHEO’s
responsibilities for Fannie Mae.

In 2003 OFHEO opened a special review of Fannie
Mae’s accounting and financial practices, ultimately
concluding that the enterprise had departed from generally
accepted accounting principles in order to manipulate its
reported earnings and inflate executive compensation.
Although OFHEO has since closed its investigation and
concluded its enforcement actions, its preliminary
investigation report prompted several private civil actions
against Fannie Mae, its senior executives, and others. These
actions have been consolidated into multidistrict litigation in
the United States District Court for the District of Columbia.

Although OFHEO is not itself a party to the multidistrict
litigation, the parties have subpoenaed records it collected in
performing its oversight functions and preparing its
investigation report. This appeal concerns a dispute over
subpoenas issued by appellees, three individual defendants in
the multidistrict litigation who were senior executives at
Fannie Mae: former chairman and CEO Franklin Raines,
 3
former CFO J. Timothy Howard, and former senior vice
president and controller Leanne Spencer.

In the summer of 2006, Howard and Raines subpoenaed
over thirty categories of documents from OFHEO. See Fed.
R. Civ. P. 45(c)(2)(B)(ii) (governing subpoenas to non-
parties). They claimed that the documents would aid their
defense by showing that they “had been completely
transparent with OFHEO,” Appellees’ Br. 5; that “OFHEO
had approved Fannie Mae’s accounting and compensation
practices,” id.; and that OFHEO’s investigation “was
politically motivated and biased,” id. at 6. Arguing that
Howard and Raines should have instead sought these
documents pursuant to its disclosure regulations, OFHEO
moved to quash the subpoenas, and the individual defendants
moved to compel compliance. On November 6, 2006, the
district court ruled for the individual defendants and directed
OFHEO to comply during the next four months.

Although OFHEO began producing documents, it asked
Howard and Raines (now joined by Spencer, the third
appellee) to limit their requests for electronically stored
information in order to minimize the burden on OFHEO.
Responding by letter dated February 18, 2007, the individual
defendants revised their initial requests for such information,
limiting them for the time being to certain email
communications stored on OFHEO’s network and backup
tapes. Shortly thereafter, OFHEO filed a motion with the
district court seeking an approximately one-month extension
of the time to comply. Representing that the parties had
“agreed that the Court’s November 6, 2006 Order did not
apply to the ESI [i.e., electronically stored information],”
OFHEO’s motion proposed extending the deadline only for
paper documents. OFHEO’s Mot. for Extension 4, Mar. 9,
2007. OFHEO explained that it was providing electronically
 4
stored information voluntarily and not pursuant to the court’s
order.

The court granted OFHEO’s motion, but the individual
defendants objected, claiming that they had never agreed that
the order left out electronically stored information. At an
April 2007 status conference, the district court confirmed that
its November 6, 2006 order covered such information and
that, in approving OFHEO’s proposed extension order, it
hadn’t intended to limit the new deadline to paper documents.
It granted OFHEO’s request for a further one-month
extension to produce the outstanding information.

During the summer of 2007, OFHEO reported to the
court that it had produced all documents requested by the
February letter. But skeptical of the limited production, the
individual defendants sought and obtained a Rule 30(b)(6)
deposition, which confirmed that OFHEO had failed to search
all of its off-site disaster-recovery backup tapes. See Fed. R.
Civ. P. 30(b)(6) (providing for depositions of organizations
through designated representatives). According to OFHEO, it
never understood the February letter’s request for
communications on backup tapes to apply to its disaster-
recovery backup tapes, but nonetheless voluntarily undertook
to search them for certain of the requested documents.

In August of 2007, the individual defendants moved to
hold OFHEO in contempt. In response, the district court,
stating that it had “no doubt” that the OFHEO disaster-
recovery backup tapes were “going to be looked at,”
scheduled a contempt hearing in order to assess the burden
that examination of such tapes would impose on OFHEO.
Hr’g Tr. at 76 (Sept. 19, 2007). Following the first day of the
hearing, OFHEO and the individual defendants entered into a
stipulated order that held the contempt motions in abeyance
 5
and required OFHEO to conduct searches of its disaster-
recovery backup tapes and provide all responsive documents
and privilege logs by January 4, 2008. In language central to
the issue before us, the stipulated order’s fifth paragraph
states:

OFHEO will work with the Individual Defendants to
provide the necessary information (without
individual document review) to develop appropriate
search terms. By October 19, 2007, the Individual
Defendants will specify the search terms to be used.

Stipulated Order ¶ 5, Sept. 27, 2007.

Pursuant to the stipulated order, the individual defendants
submitted over 400 search terms, which covered
approximately 660,000 documents. OFHEO objected on the
grounds that the stipulated order limited the individual
defendants to “appropriate search terms,” but the district court
disagreed, ruling on November 2, 2007 that the stipulated
order gave the individual defendants sole discretion to specify
search terms and imposed no limits on permissible terms.
Although the district court made this ruling in an off-the-
record chambers conference, the parties agree on its meaning.

OFHEO undertook extensive efforts to comply with the
stipulated order, hiring 50 contract attorneys solely for that
purpose. The total amount OFHEO spent on the individual
defendants’ discovery requests eventually reached over $6
million, more than 9 percent of the agency’s entire annual
budget.

On November 29, 2007, the day before an interim
deadline for production of several categories of material,
OFHEO informed the district court that it would be unable to
 6
meet that deadline and moved for an extension until
December 21, assuring the court that it could meet that
extended deadline. The court granted the motion, but two
days before the extended deadline, OFHEO informed the
court not only that its previous assurances had been based on
insufficient data, but also that it had only recently hired the
necessary number of contract attorneys. OFHEO told the
court that it would be unable to comply with the extended
interim deadline, and that although it could produce all non-
privileged documents by the ultimate January 4, 2008
deadline, it would be unable to produce all the required
privilege logs until February 29.

The individual defendants renewed their motions to hold
OFHEO in contempt. On January 22, the district court
granted the motions. The court recognized OFHEO’s efforts
at compliance, but deemed them “not only legally insufficient,
but too little too late,” stating:

[T]he Court is cognizant of the large number of
attorneys, contract attorneys, and OFHEO personnel
working to comply with the subpoenas and the
resulting costs of this compliance. Nevertheless,
OFHEO has treated its Court-ordered deadlines as
movable goal posts and has repeatedly miscalculated
the efforts required for compliance and sought
thereafter to move them.

Hr’g Tr. at 19 (Jan. 22, 2008). As a sanction, the court
ordered production of all documents withheld on the sole
basis of the qualified deliberative process privilege and not
logged by the January 4, 2008 deadline. Contrary to the
individual defendants’ requests, however, the court made
clear that production was to be made only to counsel and
would not waive the privilege. Although OFHEO says that it
 7
provided the non-privileged documents by January 4 and the
privilege logs by the end of February, the individual
defendants claim that approximately 20,000 documents
remain unaccounted for.

OFHEO appeals the contempt finding, arguing that the
stipulated order limited the individual defendants to
specifying “appropriate” search terms and did not
unambiguously compel it to process inappropriate terms. In
the alternative, OFHEO argues that it substantially complied
with the stipulated order, rendering a finding of contempt
inappropriate, and that in any event the district court abused
its discretion by compelling compliance with the subpoenas in
the first place. OFHEO also appeals the district court’s
choice of sanction, which this court stayed pending appeal.
Exercising our appellate jurisdiction due to the finding of
contempt, see U.S. Catholic Conference v. Abortion Rights
Mobilization, Inc., 487 U.S. 72, 76 (1988), we review both the
contempt finding and the sanction for abuse of discretion,
Food Lion, Inc. v. United Food & Commercial Workers Int’l
Union, AFL-CIO-CLC, 103 F.3d 1007, 1016 (D.C. Cir. 1997).

II.
We begin with OFHEO’s principal argument: that
paragraph five of the stipulated order limits the individual
defendants to specifying only “appropriate” search terms, and
that by transgressing this limitation, the individual defendants
relieved OFHEO of its obligation to process the search terms
and to produce the corresponding documents and privilege
logs by the stipulated order’s deadline. We disagree.

Although OFHEO characterizes paragraph five’s use of
the phrase “appropriate search terms” as a protection it
bargained for, it presented no extrinsic evidence for this
claim. As a consequence, we interpret the meaning of the
 8
stipulated order based on the document itself. See Segar v.
Mukasey, 508 F.3d 16, 22 (D.C. Cir. 2007) (“[C]onstruction
of a consent decree is essentially a matter of contract law.”
(internal quotation marks omitted)). On its face, paragraph
five’s first sentence uses the phrase “appropriate search
terms” to describe an obligation on OFHEO, not the
individual defendants, and its second reserves full discretion
to the individual defendants to specify search terms:

OFHEO will work with the Individual Defendants to
provide the necessary information (without
individual document review) to develop appropriate
search terms. By October 19, 2007, the Individual
Defendants will specify the search terms to be used.

Stipulated Order ¶ 5. OFHEO describes paragraph five as
“[c]onfining defendants to ‘appropriate search terms,’”
Appellant’s Opening Br. 23, but it quotes neither sentence in
full and its opening brief never so much as mentions the
second sentence. This omission is striking given that on its
face the second sentence imposes no limitation on the terms
the individual defendants may specify. To defeat such a clear
statement, the remainder of the stipulated order would need to
provide a correspondingly persuasive indication that the
individual defendants are somehow limited in their choice of
search terms. It does not.

Paragraph five’s reference to “appropriate search terms,”
on which OFHEO exclusively relies, imposes no limitation on
the individual defendants. The paragraph directs OFHEO and
the individual defendants to work together, but only to
facilitate OFHEO’s provision of information to assist in
developing search terms. The phrase “to develop appropriate
search terms” indisputably modifies “the necessary
information”; it is not an independent obligation on the
 9
parties. See Stipulated Order ¶ 5 (“OFHEO will work with
the Individual Defendants to provide the necessary
information . . . to develop appropriate search terms.”). That
is, the phrase serves only to define the type of information
OFHEO must provide—that information necessary for the
development of appropriate search terms. Nothing in
paragraph five’s text gives OFHEO any role in actually
developing those search terms.

Although paragraph five defines the information OFHEO
must provide, it nowhere limits the search terms the
individual defendants ultimately specify to those based on this
information. If the individual defendants wished to specify
search terms based on information obtained from other
sources at their disposal, nothing in the paragraph precludes
that. Nor is there any logical reason why it would—after all,
the individual defendants undoubtedly acquired voluminous
information from the parties to the multidistrict litigation
during discovery, and it’s quite unlikely that they and OFHEO
would have ruled out search terms based on this wholly
independent source of information. Thus the phrase
“appropriate search terms,” which relates only to the
information OFHEO must provide, imposes no restrictions on
the search terms the individual defendants end up specifying,
which may be based on wholly independent information.

OFHEO argues that reading the stipulated order to allow
the individual defendants full discretion to specify search
terms would render the phrase “to develop appropriate search
terms” surplusage. Again, we disagree. Clearly the whole
phrase isn’t surplusage: without it, the agreement would only
impose the maddeningly nebulous requirement that OFHEO
“provide the necessary information,” giving no hint as to what
type of information that might be.
 10
Even if some variant of the phrase is essential, might the
word “appropriate” still be surplusage under our plain
reading? We think not. The word plays a valuable role: it
sharpens OFHEO’s obligations to the individual defendants.
Without that word, the “necessary information . . . to develop
search terms” might consist of nothing more than minimally
useful information, such as the technical specifications of
OFHEO’s data retrieval software. But paragraph five requires
OFHEO to provide more: it must furnish that information
necessary to formulate search terms that are not just
minimally sufficient, but actually appropriate to the task of
retrieving relevant documents. See WEBSTER’S THIRD NEW
INTERNATIONAL DICTIONARY 106 (1993) (defining
“appropriate” as “specially suitable”). The inclusion of such
detail is understandable given the difficulties OFHEO and the
individual defendants experienced resolving their discovery
disputes up to that point.

The word “appropriate” would be surplusage only if the
information necessary to develop appropriate search terms
was of no value whatsoever to the individual defendants. In
that case it would have made no sense for paragraph five to
obligate OFHEO to do something that the individual
defendants couldn’t possibly want. But of course such
information is quite valuable to the individual defendants.
They want to retrieve the relevant documents as efficiently as
possible, and appropriate search terms, by definition, do so
better than minimally adequate search terms. Since the first
sentence’s requirement that OFHEO do something valuable
for the individual defendants is hardly remarkable, we create
no surplusage when we take at face value its plain text, which
sets forth only OFHEO’s obligation to provide information at
the outset, not any limitation on the individual defendants’
discretion to choose search terms.
 11
The language surrounding paragraph five strongly
supports this straightforward reading. Unlike paragraph five,
the remainder of the stipulated order includes several
provisions that unmistakably protect OFHEO. For example,
paragraph six protects OFHEO from having to produce
certain categories of documents by stating simply, “OFHEO
will not produce the following documents,” and enumerating
in detail three protected categories. Stipulated Order ¶ 6.
Other provisions in the stipulated order expressly limit the
individual defendants to identifying fifteen backup tape sets to
restore out of over 1,000 backup tapes in OFHEO’s
possession, id. ¶ 1; cap the number of OFHEO record
custodians subject to the requests, id. ¶ 2; specify the relevant
time period for the individual defendants’ requests, id. ¶ 3;
and provide deadlines that effectively extend OFHEO’s time
to comply by several months, id. ¶¶ 8–9. Tellingly, even the
very sentence in paragraph five that contains the word
“appropriate” unambiguously includes a specific protection
for OFHEO: its obligation to provide information does not
extend to “individual document review.” See id. ¶ 5
(“OFHEO will work with the Individual Defendants to
provide the necessary information (without individual
document review) to develop appropriate search terms.”).
Each of these protections is specifically set forth in the
stipulated order and each clearly protects OFHEO. The
contrast to the word “appropriate”—appearing without
elaboration in a sentence defining OFHEO’s obligations—is
revealing.

Urging us to find some contractual limitation on the
individual defendants’ discretion, OFHEO argues that
allowing the individual defendants to specify every word in
the dictionary as a search term would be absurd. Indeed it
would. But OFHEO’s protection against such an abusive list
of search terms comes not from the word “appropriate” but
 12
from the general contractual duty of good faith and fair
dealing. See United States v. Jones, 58 F.3d 688, 692 (D.C.
Cir. 1995) (noting that all contracts “include[] an implied
obligation of good faith and fair dealing”). We have no doubt
that even given the full discretion paragraph five affords the
individual defendants, a request for every word in the
dictionary would have been in bad faith and invalid. See id. at
690, 692 (holding that a prosecutor’s decision whether to
move for leniency could be reviewed for bad faith even where
the plea agreement stated that the government “retain[ed] its
discretion” regarding whether to make such a motion).

OFHEO insists that the individual defendants’ list of
search terms was tantamount to a request for the dictionary,
resulting as it did in the retrieval of approximately 80 percent
of the office’s emails. Oral Arg. at 30:20–:40. But far from
showing bad faith, that figure may simply indicate that most
of the emails actually bear some relevance, or at least include
language captured by reasonable search terms. More
fundamentally, OFHEO does not argue that the individual
defendants exercised their contractual rights in bad faith; it
argues only that they violated a textual limitation on those
rights. As described above, however, that limitation appears
nowhere in the stipulated order.

As a fallback defense to contempt, OFHEO insists that
the stipulated order is at least ambiguous, rightly emphasizing
that contempt is appropriate only for violation of a “clear and
unambiguous” order. Armstrong v. Executive Office of the
President, Office of Admin., 1 F.3d 1274, 1289 (D.C. Cir.
1993) (internal quotation marks omitted). To be sure, there
may be some issues as to which the order might be
ambiguous. For example, had OFHEO withheld some
information on the ground that it was unnecessary for the
development of appropriate search terms, the text might not
 13
have unambiguously resolved that dispute. But paragraph
five unambiguously resolves the dispute that is before us: its
second sentence reserves to the individual defendants
unrestricted discretion to “specify the search terms to be
used,” Stipulated Order ¶ 5, and its first sentence
unambiguously applies the phrase “appropriate search terms”
only to OFHEO’s obligation to provide the individual
defendants with information at the outset. Thus, whatever
other ambiguities may lurk in the stipulated order, it
unambiguously requires OFHEO to process the search terms
the individual defendants specify.

In sum, the stipulated order obligated OFHEO to process
the search terms the individual defendants specified and to
meet the corresponding deadlines, and the office violated the
order by failing to produce privilege logs on time.

III.
OFHEO makes two additional challenges to the district
court’s contempt finding: it argues that the district court
abused its discretion by compelling compliance with the
subpoenas in the first place, and that in any event it
substantially complied with the stipulated order in good faith.
We address each argument in turn.

Federal Rule of Civil Procedure 45 requires courts to
safeguard non-party subpoena recipients from significant
expense resulting from compliance. See Watts v. SEC, 482
F.3d 501, 509 (D.C. Cir. 2007). According to OFHEO, the
district court violated Rule 45 by compelling compliance
without considering cost-shifting, narrowing the scope of the
requests, or “find[ing] that defendants demonstrated good
cause for forcing OFHEO to retrieve its inaccessible data.”
Appellant’s Opening Br. 31–32. Whatever the merits of these
claims, OFHEO abandoned them by entering into the
 14
stipulated order. Indeed, OFHEO’s trial counsel agreed to the
stipulation in the middle of a hearing scheduled for the very
purpose of considering OFHEO’s objections to the subpoenas.
Had OFHEO wanted review of the district court’s initial order
to compel compliance with the subpoenas, it could have
completed the hearing and attempted to convince the court to
reconsider. Failing that, it could have defied the adverse
ruling and appealed any ensuing contempt finding. See U.S.
Catholic Conference, 487 U.S. at 76. Instead, it chose to sign
the stipulated order, which ended the hearing and
unquestionably settled the discovery dispute. Having
stipulated to a schedule for complying with the subpoenas,
OFHEO can hardly complain now about being held to its
agreement.

Seeking to revive the dispute it settled, OFHEO objects
to the district court’s off-the-record November 2, 2007 ruling
interpreting the stipulated order. As OFHEO sees it, this
ruling amounts to a second order compelling compliance with
the subpoenas and shares the same flaws as the first. But in
this ruling, the district court merely restated the obligations
imposed by the stipulation. It didn’t determine anew that
OFHEO had to provide documents; OFHEO already
determined that by stipulating to do so.

Alternatively, OFHEO insists that even if it was properly
subject to the stipulated order, it substantially complied in
good faith. The parties agree that contempt may be
inappropriate when a party in good faith substantially
complies with a court order. See Food Lion, 103 F.3d at
1017. Here OFHEO undeniably made extensive efforts to
produce the documents and privilege logs in accordance with
the timetable set forth in the stipulated order. It hired 50
contract attorneys, eventually spending a substantial portion
of its budget attempting to comply with the subpoenas.
 15

Were we deciding this matter in the first instance, we
might not have held OFHEO in contempt. But our review is
for abuse of discretion, and OFHEO has given us no basis for
concluding that the district court abused its discretion by
finding it in contempt for failing to comply with the stipulated
order’s deadlines. As the district court explained, even two
and a half weeks after the final deadline set forth in the
stipulated order, OFHEO had produced just six of the required
thirty-one privilege logs. Not until after the district court held
OFHEO in contempt did it provide the remaining logs, and
according to the individual defendants even these are
incomplete.

District judges must have authority to manage their
dockets, especially during massive litigation such as this, and
we owe deference to their decisions whether and how to
enforce the deadlines they impose. See Berry v. District of
Columbia, 833 F.2d 1031, 1037 n.24 (D.C. Cir. 1987).
Though we recognize OFHEO’s strenuous efforts to comply,
the district court found them to be “too little too late,” Hr’g
Tr. at 19 (Jan. 22, 2008), and determined that the office’s
compliance was inadequate, id. at 21. In making this
assessment, the court placed great weight on the long history
of the discovery dispute and on OFHEO’s repeated requests
for extensions, ultimately concluding that OFHEO had
requested one extension too many and that strict enforcement
of its deadline was warranted. Given the district court’s
intimate familiarity with the details of the discovery dispute,
the scale of the production requested, and the progress of the
multidistrict litigation as a whole, we are ill-positioned to
second-guess that assessment. Were we on this record to
overturn the district court’s fact-bound conclusion that
OFHEO dragged its feet until the eleventh hour, we would
 16
risk undermining the authority of district courts to enforce the
deadlines they impose.

IV.
This brings us to OFHEO’s final argument: that even if
contempt is appropriate, the district court abused its discretion
in its choice of sanction. After finding that OFHEO’s failure
to meet the deadline placed it in contempt of the stipulated
order, the district court directed the office to provide the
actual documents withheld on the basis of the deliberative
process privilege and not logged by the deadline. The district
court described the sanction as “designed to move the
[d]iscovery process forward and to allow for [a] more
targeted, and therefore more truncated, privilege litigation
process.” Hr’g Tr. at 26 (Jan. 22, 2008). The district court
therefore specified that the compulsory disclosure would not
waive the privilege with respect to further disclosure; directed
that the documents be provided only to individual defendants’
counsel; and created a mechanism for OFHEO to recover
documents found to be privileged.

The parties dispute whether the district court imposed the
sanction pursuant to its contempt power or its inherent
authority to levy discovery sanctions. This distinction matters
because unlike discovery sanctions, civil contempt sanctions
may not be punitive—they must be calibrated to coerce
compliance or compensate a complainant for losses sustained.
Compare Cobell v. Norton, 334 F.3d 1128, 1145 (D.C. Cir.
2003) (civil contempt sanctions), with Webb v. District of
Columbia, 146 F.3d 964, 971 (D.C. Cir. 1998) (discovery
sanctions).

In our view, even though the district court mentioned that
the individual defendants had filed motions for discovery
sanctions that were independent of their motions for
 17
contempt, Hr’g Tr. at 21–22 (Jan. 22, 2008), the structure of
the order makes clear that the sanction functioned as a
contempt sanction. The district court’s consideration of the
appropriate sanction followed hot on the heels of its contempt
finding, making clear that it imposed the sanction for the
contempt it found, not simply as a non sequitur. Id. at 21
(“Thus, based on the foregoing, the Court finds that OFHEO
is in civil contempt of the September 27th, 2007, stipulated
order. What sanctions are appropriate?”). Perhaps the
sanction served as both a contempt sanction and a discovery
sanction, but the parties nowhere advance this interpretation.
In any event, we have no need to consider it given that the
district court had ample authority to impose the sanction
under its contempt power alone.

The sanction was a proper exercise of the district court’s
contempt power because it coerced compliance with the
stipulated order and compensated the individual defendants
for the delay they suffered. The stipulated order required
OFHEO to disclose all documents not in fact privileged and,
as the district court pointed out, the non-disclosure of the logs
prevented the individual defendants from challenging
OFHEO’s privilege claims. Id. at 23. Accordingly,
OFHEO’s tardiness in turning over the logs has delayed the
resolution of disputes over its ultimate compliance with its
obligation to produce all unprivileged documents. The
district court found that it could mitigate this delay by
requiring OFHEO to provide certain of the privileged
documents themselves, but solely for the purpose of resolving
whether they were in fact privileged. That is, by facilitating
faster resolution of outstanding privilege disputes, the
sanction not only coerced OFHEO’s compliance with its
obligation to provide all documents not in fact privileged, but
also compensated the individual defendants by ameliorating
OFHEO’s delay in disclosing the privilege logs. As it did not
 18
require wholesale waiver of the privilege, the sanction was
non-punitive and fit comfortably within the district court’s
civil contempt power.

Though it imposes some burden on OFHEO, the sanction
is not so disproportionate or unreasonable as to constitute an
abuse of discretion. The district court considered various
possible sanctions, ranging from OFHEO’s insistence on no
sanction at all to the individual defendants’ request for a fine
and wholesale waiver of the deliberative process privilege.
Recognizing that it could not let OFHEO’s contempt go
unaddressed, the district court nonetheless rejected fines on
the grounds that they would ultimately be paid by Fannie
Mae, a bystander to the discovery dispute. See 12 U.S.C.
§ 4516(a) (providing funding for OFHEO through
assessments on regulated entities). It also rejected wholesale
waiver, choosing instead a middle ground calculated to
facilitate prompt resolution of the dispute without impairing
OFHEO’s ability to protect privileged communications from
general disclosure.

OFHEO gives us no reason to question the district court’s
choice of sanction. Indeed, although insisting that the
sanction amounted to an abuse of discretion, it has steadfastly
refused—both in its briefs and at oral argument—to identify a
single permissible sanction. And although OFHEO claims
that the district court’s sanction “effectively” waives the
deliberative process privilege, Appellant’s Opening Br. 37, its
counsel conceded at oral argument that the court-ordered non-
waiver disclosure will allow OFHEO to assert privilege with
respect to those documents in the future, Oral Arg. at 31:40–
32:09; cf. Fed. R. Civ. P. 26(b)(5)(B) (setting forth procedure
for parties to retrieve inadvertently disclosed privileged
material without allowing its use). Any documents disclosed
to the individual defendants’ attorneys that turn out to be
 19
privileged will remain privileged and presumably will be
returned to OFHEO. The district court thus took pains to
ensure that the important governmental interests guarded by
the deliberative process privilege remain fully protected.

V.
Seeing no abuse of discretion in the district court’s
finding of contempt or choice of sanction, we affirm.

So ordered.