Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-05258/USCOURTS-caDC-05-05258-0/pdf.json

Parties Involved:
Hector V. Barreto
Appellant
Diamond Ventures, LLC
Appellee
C. Earl Peek
Terminated Party

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 4, 2006 Decided July 7, 2006

No. 05-5258

DIAMOND VENTURES, LLC,

APPELLEE

v.

HECTOR V. BARRETO, ADMINISTRATOR, UNITED STATES

SMALL BUSINESS ADMINISTRATION,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 03cv01449)

Alan Burch, Assistant United States Attorney, argued the

cause for the appellant. Kenneth L. Wainstein, United States

Attorney and Michael J. Ryan, Assistant United States Attorney,

were on brief. R. Craig Lawrence, Assistant United States

Attorney, entered an appearance.

Joshua N. Rose argued the cause for the appellee.

Before: HENDERSON, ROGERS and GRIFFITH, Circuit Judges.

Opinion for the Court filed by Circuit Judge HENDERSON.

Concurring opinion filed by Circuit Judge ROGERS.

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1

Unless otherwise noted the facts are taken from the parties’

submissions below. See Def’s Memo. in Support of Mot. for Prot.

Order, JA 6; Plaintiff’s Mem. re: Def’s Mot. for Prot. Order, JA 65.

KAREN LECRAFT HENDERSON, Circuit Judge: Hector

Barretto, Administrator of the Small Business Administration

(SBA), seeks interlocutory review of a district court order

allowing the principals and employees of Diamond Ventures

LLC (Diamond Ventures) access to applications submitted to the

SBA in connection with the SBA’s Small Business Investment

Company (SBIC) program. The district court granted access via

a protective order issued pursuant to Federal Rule of Civil

Procedure 26 in Diamond Ventures’ lawsuit against the SBA.

For the following reasons, we grant the SBA’s interlocutory

appeal, reverse the district court’s order and remand for further

proceedings. 

I.

Under the SBA’s SBIC program, see 15 U.S.C. §§ 681 et

seq., a successful applicant is granted a license to operate as an

SBIC, a small venture capital resource for small businesses.1

The SBA guarantees the SBIC’s securities in the event the SBIC

fails, allowing the SBIC to better leverage capital investment.

The heart of the application process involves an applicant’s

completion of the Management Assessment Questionnaire

(MAQ), which includes detailed descriptions of the applicant’s

proposed operations, investment strategies, expertise and

proposed sources of capitalization, including general categories

of anticipated investment funds. MAQ, reprinted at Joint

Appendix (JA) 25. The MAQ states that the information

included therein “will be kept confidential to the extent

permitted by law.” Id. Between December 2001 and October

2002, Diamond Ventures applied for an SBIC license from the

SBA four times and was denied a license each time. See, e.g.,

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2

Peek originally brought the claim pro se on behalf of himself and

Diamond Ventures. Diamond Ventures later retained counsel and

filed an amended complaint with itself as the only plaintiff. See

Diamond Ventures v. Barretto, No. 03-1449, 2nd Am. Compl., R.

Doc. 47. 

3

Rule 26(c)(7) provides that a party may move “that a trade secret

or other confidential research, development, or commercial

information not be revealed or be revealed only in a designated way.”

Under the rule “[t]he court may enter an order restricting disclosure of

trade secrets and confidential research, development, or commercial

information obtained during discovery. . . . The court can fashion any

order it sees fit, limiting how the information may be used, who may

see it, etc. . . .” Baicker-McKee et al., Federal Civil Rules Handbook,

571–2 (2003 ed.) (citing Seattle Times v. Rhineheart, 467 U.S. 20

Letter from Jeffrey D. Pierson, SBA Associate Administrator for

Investment, to C. Earl Peek, Managing Partner, Diamond

Ventures (Feb. 25, 2003), JA 182. Diamond Ventures’ principal

organizer, Earl Peek, then filed a complaint on its behalf against

the SBA, alleging Diamond Ventures’ applications had been

denied on the basis of race in violation of the Equal Credit

Opportunity Act, 15 U.S.C. §§ 1691 et seq.2

Pursuing discovery, Diamond Ventures sought production of

all MAQs submitted by other SBIC applicants to the SBA. The

SBA offered Diamond Ventures’ counsel access to all of the

more than 300 SBIC applications it has on file but opposed

disclosure of the applications to Diamond Ventures’ principals

and employees on the grounds that each SBIC applicant has an

expectation of privacy regarding its own MAQ and that the

SBA’s policy is to treat the information contained therein as

confidential. The parties could not agree on a protective order

and eventually filed simultaneous motions for a protective order

under Federal Rule of Civil Procedure 26(c)(7).3

 JA 59, 65.

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(1984) (emphasis added)). 

4

Diamond Ventures’ proposed management included, in addition

to Peek, Dileep Rao and Milton Marbarosh. The SBA’s proposed

protective order sought to deny any Diamond Ventures principal or

employee access to the MAQs. Diamond Ventures argues before us

that Peek “is the only member of the management team whose access

to the disputed documents is necessary to plaintiffs’ ability to

prosecute this action at a feasible cost.” Appellee’s Br. 2 n.1. 

The two motions were identical except that Diamond Ventures’

version sought to allow its “officers and other personnel . . . who

have a need to use protected materials in order to prepare for and

assist in the prosecution of this action” access to the MAQ

applications while the SBA’s limited access to Diamond

Ventures’ counsel.4 Compare Diamond Ventures’ Proposed

Prot. Order ¶ 3(a)(ii), JA 123, with SBA’s Proposed Prot. Order

¶ 3(a), JA 60. Diamond Ventures’ counsel argued that Diamond

Ventures could not adequately press its discrimination claim

without Peek’s assistance because of Peek’s expertise. Diamond

Ventures’ counsel also stated that hiring an outside expert to

review the MAQs would be “prohibitively expensive.” Pl.’s

Mot. re: Def.’s Mot. for Prot. Order, JA 75. 

On January 18, 2005 the district court by minute order

denied the SBA’s motion, JA 127 (Denial Order), and one week

later granted Diamond Ventures’ motion, entering a protective

order that allowed Diamond Ventures’ principals and employees

access to the MAQs. JA 128 (Protective Order). The SBA filed

a motion for reconsideration. On April 18, 2005, the district

court denied the SBA’s motion, stating that it “was not

persuaded . . . that the information [in the MAQs] is

confidential, or, as Defendant claims, that the applicants have an

expectation of privacy in the information they submit.” Apr. 17,

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28 U.S.C. § 1291 provides that courts of appeals “shall have

jurisdiction of appeals from all final decisions of the district courts of

the United States.” A decision is “final” under section 1291 if it

“leaves nothing for the court to do but execute the judgment.” Pigford

v. Veneman, 369 F.3d 545, 547 (D.C. Cir. 2004) (quoting Catlin v.

United States, 324 U.S. 229, 233 (1945)). 

2005 Reconsideration Order at 2, JA 175 (Reconsideration

Order). The Reconsideration Order noted that Diamond

Ventures argued “persuasively[] that it would be cost prohibitive

for it to hire independent experts merely to review the

documents. Instead, it must rely on its principals’ expertise to

assist counsel in determining what competitive information is

relevant and necessary to the claims.” Id. The SBA appeals the

three orders and in the alternative petitions for a writ of

mandamus preventing release of the information. See

Appellant’s Br. 16–17.

II.

A. Jurisdiction

In Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541

(1949), the United States Supreme Court set forth the “collateral

order” doctrine authorizing the interlocutory appeal of an order

so long as the order “[1] conclusively determine[s] the disputed

question, [2] resolve[s] an important issue completely separate

from the merits of the action, and [3] [is] effectively

unreviewable on appeal from a final judgment.” Will v. Hallock,

126 S.Ct. 952, 957 (2006) (quotations omitted). The doctrine is

“stringent[ly]” applied so as not to “overpower the substantial

finality interests” of 28 U.S.C. § 1291.5

 Id. 

The first and third Cohen factors are plainly met in this case.

The Protective Order conclusively determines the sole issue in

this dispute: Diamond Ventures’ principals’ and employees’

access to the MAQs. In addition, the order granting such access

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would be unreviewable at the litigation’s end because the harm

the SBA alleges—competitive harm to the SBIC applicants

caused by Diamond Ventures’ principals’ review of the formers’

MAQs—could not be undone on appeal. See Providence

Journal v. FBI, 595 F.2d 889, 890 (1st Cir. 1979)

(confidentiality lost once documents were surrendered pursuant

to court order; “[t]he status quo could never be restored”). The

closer issue is the second Cohen requirement, which itself

consists of two prongs: separability and importance. As to

separability, Diamond Ventures’ management’s access to the

MAQs has nothing to do with the merits of its discrimination

claim. Diamond Ventures argues that the “importance” factor

is lacking because confidential information, unlike privileged

material, is discoverable under the federal rules. Appellee’s Br.

16–18 (citing and distinguishing In re Sealed Case (Medical

Records), 381 F.3d 1205, 1209–10 (D.C. Cir. 2004) (Medical

Records) (discovery order compelling disclosure of privileged

information was “important in Cohen’s sense” because appellant

claimed information was protected by psychotherapist’s

privilege and interests promoted by protecting it from disclosure

were “weightier than the societal interests advanced by the

ordinary operation of final judgment principles”) (citation and

quotation marks omitted). An “important issue” under Cohen is

determined not by the nature of the information being sought but

by the interest that would be harmed if immediate review were

not allowed weighed against the interest in finality. See United

States v. Philip Morris, 314 F.3d 612, 617 (D.C. Cir. 2003)

(under Cohen, issue is important “if the interests that would

potentially go unprotected without immediate appellate review

of that issue are significant relative to the efficiency interests

sought to be advanced by adherence to the final judgment rule”)

(citing Digital Equip. v. Desktop Direct, 511 U.S. 863, 879

(1994)); id. at 618–19 (“The importance prong requires

weighing the institutionally significant status or relationship at

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FOIA’s Exemption 4 exempts from disclosure “trade secrets and

commercial or financial information obtained from a person and

privileged or confidential.” 5 U.S.C. § 552(b)(4).

stake.”) (quotations omitted). In Philip Morris we held that a

discovery order implicating the attorney-client privilege was

significant compared to the counterbalancing interest in finality

because the privilege “rests at the center of our adversary

system.” Philip Morris, 314 F.3d at 618. In Medical Records,

the significant interest under Cohen’s second factor was that the

documents sought to be discovered were covered by the

psychotherapist’s privilege under Federal Rule of Evidence 501

and by the medical records privilege under the District of

Columbia Municipal Code. Medical Records, 381 F.3d at

1209–10. 

Using the Philip Morris test, we believe the privacy and

competitive interests of the SBIC applicants that “would

potentially go unprotected without immediate appellate review”

overcome the interest in finality. As the SBA points out, the

MAQ contains information of the type “routinely protected”

under the Trade Secrets Act, see Appellant’s Reply Br. 7 (citing

18 U.S.C. § 1905), and under Exemption 4 of section 552 of the

Freedom of Information Act,6 cf. McDonnell Douglas Corp. v.

U.S. Dep’t of Air Force, 375 F.3d 1182, 1190, 1192 (D.C. Cir.

2004) (concluding disclosure of pricing information likely to

cause substantial competitive harm and therefore exempt from

disclosure). The SBA submitted declarations from current and

former SBA officials stating that the SBA has in the past

successfully invoked FOIA Exemption 4 to protect MAQ

information from disclosure. See Decl. of Margaret Theresa

Dennin, Chief Administrative Officer for SBA Investment

Division, ¶ 4, JA 58 (“SBA has never disclosed confidential

business information contained in MAQs in response to a FOIA

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7

We note, however, that if MAQ information were protected under

the Trade Secrets Act, it nonetheless could be discoverable. See Fed.

R. Civ. P. 26(c)(7); supra note 3 (court “may enter an order restricting

disclosure of trade secrets,” fashioning “any order it sees fit”);

Grumman Aerospace Corp. v. Titanium Metals Corp., 91 F.R.D. 84,

90 (E.D.N.Y. 1981) (“Nor does the Trade Secrets Act . . . provide any

basis for preventing disclosure. Disclosure pursuant to the discovery

rules is disclosure ‘authorized by law,’ which the terms of the Act

permit.”). Any protection provided by statute would still be relevant

to the balancing of interests required under Rule 26. See Medical

Records, 381 F.3d at 1215–16 (“[I]n determining which interests to

weigh in the Rule 26 balance, courts look to statutory confidentiality

provisions, even if they do not create enforceable privileges.”). 

8

See Dennin Decl. ¶¶ 4–5, JA 57–58 (“I have had numerous

opportunities to receive feedback from SBICs regarding their

objections to the disclosure, either through SBA’s response to a FOIA

request or in civil litigation, of confidential and proprietary business

information they submit to SBA, including [MAQ information]. . . .

SBA has never disclosed confidential business information contained

in MAQs . . . absent an appropriate protective order.”).

request”); Decl. of Michael Wyatt, former SBA General

Counsel, ¶ 5, JA 149 (“SBA takes the position and advises

Applicants that their [MAQ] submissions fall within FOIA

Exemption 4”). While we do not equate the MAQ with a trade

secret,7 we do believe that the notice on the face of the MAQ

itself that the information submitted “will be kept confidential

to the extent permitted by law” as well as the SBA’s and SBIC

applicants’ institutional interests in confidentiality bring the

MAQ within caselaw allowing interlocutory appeal. 

An SBIC applicant relies on the notice, along with other

assurances given by the SBA,8 in deciding to submit the MAQ

which discloses vital business strategies such as the categories

of investors from whom it has solicited funds before applying,

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see MAQ at 11, JA 35, categories of anticipated sources of

investment funds, id. at 12, JA 36, names and contact

information of its equity partners, id. at 13, JA 37, and its

“investing strategy.” Its “investing strategy,” according to the

MAQ, represents the ideal dollar distribution of an applicant’s

investments among industry sectors and its overall investment

and risk reduction philosophy. Id. at 16, JA 40. The “cost[] of

delay,” Philip Morris, 314 F.3d at 618, would be the release of

the information—submitted to the SBA with notice the

information would be kept confidential to the extent permitted

by law—to a potential competitor. This cost outweighs the

“costs of piecemeal review,” id. at 617–18, that underlie the

finality rule because, once the information is disclosed, the

SBIC applicant’s confidentiality interest is permanently lost. As

in Philip Morris, where we held that the release of information

covered by the attorney-client privilege would eviscerate the

“institutional interest” in “full and frank communication

between client and attorney,” id. at 618, releasing MAQ

information whose confidentiality an applicant is notified will

be protected would eviscerate the “full and frank” disclosure

between the applicant and the SBA necessary to the effective

enforcement of the SBIC program. If an applicant hesitates to

disclose information regarding its business plan to the SBA, the

agency may then have to make a licensing decision without the

benefit of full information—potentially resulting in a loss to the

public fisc given the fact that the SBA guarantees an SBIC’s

securities in the event of default. See 15 U.S.C. § 683(b)

(authorizing SBA to “purchase, or to guarantee the timely

payment of all principal and interest as scheduled on, debentures

or participating securities issued by” SBIC). Moreover, the

SBIC program could also be crippled by future applicants’

unwillingness to disclose information regarding their business

plans upon learning of the disclosure of the MAQs here.

Appellant’s Br. 21–22; see also Akzo N.V. v. U.S. Int’l Trade

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Comm., 808 F.2d 1471, 1483 (Fed. Cir. 1986), cert. denied, 482

U.S. 909 (1987) (“Disclosure of sensitive materials to a

[business] adversary would undoubtedly have a chilling effect

on the parties’ willingness to provide the confidential

information essential to the [agency’s] fact-finding processes.”)

We believe the confidentiality of an SBIC applicant’s MAQ

information is a sufficiently important interest to authorize our

review under Cohen.

B. The Merits

As noted, the district court has wide discretion in managing

discovery. Medical Records, 381 F.3d at 1215 (“ ‘Rule 26 vests

the trial judge with broad discretion to tailor discovery

narrowly,’ ” and “ ‘it is appropriate for the court, in exercising

its discretion . . . , to undertake some substantive balancing of

interests . . . .’ ”) (quoting Crawford-El v. Britton, 523 U.S. 574,

598 (1998) (alterations in Medical Records) and Laxalt v.

McClatchy, 809 F.2d 885, 890 (D.C. Cir. 1987)); 8 Wright and

Miller, Federal Practice and Procedure § 2043 (2d ed. 1987)

(determining “reasonable protective measures . . . to minimize

the effect on the party making the disclosure” of confidential

information within trial court’s discretion). We review the

district court’s discovery ruling for abuse of discretion. Medcial

Records, 381 F.3d at 1211. With respect to a protective order

issued pursuant to Rule 26(c)(7), the district court is to

undertake “an individualized balancing of the many interests

that may be present in a particular case.” Id. (quotation

omitted); see In re Sealed Case, 856 F.2d 268, 271 (D.C. Cir.

1988) (remanding discovery order because district court did not

“show engagement in this essential balancing process”). 

The SBA argues that the district court made three mistakes

of fact that led it to improperly weigh the competing interests.

First, the district court stated it “was not persuaded . . . that the

information” in the MAQ “[was] confidential or, as Defendant

claims, that the applicants have an expectation of privacy in the

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9

The district court also concluded that to the extent the SBA feared

public disclosure of the MAQ data, that fear was negated by the

stipulation in the Protective Order that “protected material shall be

used solely for the purposes of this litigation.” Protective Order ¶ 3(a)

at 2, JA 129; Reconsideration Order at 2, JA 175. The SBA maintains

that once Diamond Ventures’ principals have information regarding

the business operations and strategies of other SBIC applicants, they

cannot be reasonably expected to refrain from using the information

merely because they learned of it in this litigation. Use limitations are

not unusual in protective orders, see e.g., 8 Wright and Miller, Federal

Practice and Procedure § 2043 n. 21 (2d ed. 1987) (citing cases), and

there is no reason to conclude that Diamond Ventures’ principals

would willfully disobey a court order. But see U.S. Steel v. United

States, 730 F.2d 1465, 1468 (Fed. Cir. 1984) (recognizing likelihood

of inadvertent disclosure of trade secrets if information disclosed to

competitor’s in-house counsel “involved in competitive

decisionmaking”).

information they submit.” Reconsideration Order at 2, JA 175.

Second, it was not convinced that “disclosure of the MAQ

information to competitive bidders could be harmful to

applicants and chill the bidding process” inasmuch as “there is

no competitive advantage because SBICs do not compete with

each other for funding.” Id. Third, the district court found that

Diamond Ventures’ lawyers had to rely on its principals’

expertise to assist them in determining what MAQ information

was relevant to the discrimination claim because it would be too

costly for Diamond Ventures to hire an outside expert.9

We agree with the SBA that the district court erred in

finding that SBIC applicants have no expectation of privacy in

their MAQs—the notice on the face of the MAQ that the

information included therein “will be kept confidential to the

extent permitted by law” belies its finding. The district court

ignored the notice and rejected without explanation the SBA’s

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10A former SBA General Counsel declared that in his experience

representing over 100 SBIC applicants, applicants “have an

expectation that SBA will withhold [MAQ] materials from disclosure”

and to allow Diamond Ventures’ principals access to the MAQs would

result in “disclosure to a direct competitor of confidential and

proprietary Applicant data of the sort that [SBIC] Applicants and SBA

have presumed for decades to be protected from discovery and from

disclosure by Exemption 4 of FOIA.” Declaration of Michael K.

Wyatt, JA 150–51.

11Diamond Ventures’ claim that Peek can substitute for an outside

“expert” is somewhat dubious given that he has failed in four attempts

to obtain an SBIC license. See Letter from Jeffrey D. Pierson, SBA

Associate Administrator for Investment, to C. Earl Peek, Managing

Partner, Diamond Ventures (Feb. 25, 2003), JA 182. 

uncontested showing that MAQ applicants have an expectation

of privacy in their applications and believe the SBA will not

disclose the information contained in them. See Dennin Decl.

¶ 4, JA 58; Wyatt Decl. ¶¶ 4–5, JA 149.10 Moreover, the fact

that SBIC applicants may not directly compete with each other

for SBIC licensure does not mean that SBIC licensees do not

compete in the venture capital market for funding—if Diamond

Ventures’ principals, and Peek in particular, review other

MAQs, they will gain information about successful SBICs’

strategies, investor categories and funding sources and be able

to use the information either to apply once again for SBIC

licensure or to compete for funding in the venture capital market

or both. In short, the district court erroneously discounted an

SBIC applicant’s confidential and competitive interests in its

MAQ. 

On the other side of the scale, the district court overvalued

Diamond Ventures’ purported need for an expert to review the

MAQs in order to support its discrimination claim.11 The

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12The MAQ itself does not ask for information regarding race.

Diamond Ventures’s counsel proposes to review photographs

submitted with the MAQ and related documents which “normally

include photographs of the key members of the proposed management

team” in order to determine the race of MAQ applicants. Pl.’s Mem.

re: Def.’s Mot. for Prot. Order at 5, JA 65. 

information relevant to its claim—i.e., the race of the principals

of other SBIC applicants12 as well as the business strategies of

other SBIC applicants for comparison to its applications—can

be collected, we are confident, by counsel without an expert’s

assistance. Diamond Ventures’ argument that hiring an outside

expert to review the documents would be too costly—a factor on

which the district court expressly relied, see Reconsideration

Order at 2, JA 175–76 (“Plaintiff argues, persuasively, that it

would be cost prohibitive for it to hire independent experts

merely to review the documents. Instead, it must rely on its

principals’ expertise to assist counsel in determining what

comparative information is relevant and necessary to the claims.

. . . [and] the Court finds that Plaintiff’s interests in prosecuting

this case and having adequate legal representation outweigh

Defendant’s competing interests arising from unfounded fears

of public disclosure and competitive harm.”)—is irrelevant to

the balancing. That Peek originally filed his action pro se and

was accorded in forma pauperis status by the district court has

no bearing on Diamond Ventures’ financial health because a

corporation cannot file a pro se action or appear in forma

pauperis. See Rowland v. Calif. Men’s Colony, 506 U.S. 194,

201–02 (1993) (“It has been the law for the better part of two

centuries . . . that a corporation may appear in the federal courts

only through licensed counsel”). Diamond Ventures’ alleged

inability to hire an expert should not be balanced against the

legitimate confidentiality interests of all other MAQ applicants

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and the district court erred as a matter of law in doing so. See

Koon v. United States, 518 U.S. 81, 100 (1996) (because “[a]

district court by definition abuses its discretion when it makes

an error of law,” “[t]he abuse of discretion standard includes

review to determine that the discretion was not guided by

erroneous legal conclusions”); Medical Records, 381 F.3d at

1211 (quoting Koon).

For the foregoing reasons, we conclude that the district court

abused its discretion in ordering that the MAQs of all other

applicants for SBIC licensure be disclosed to Diamond

Ventures’ principals and employees. Accordingly, we vacate

Part 3(a)(ii) of the Protective Order entered on January 25, 2005

and remand for further proceedings. The SBA’s challenges to

the Denial Order and the Reconsideration Order and its petition

for mandamus relief are dismissed as moot.

So ordered.

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ROGERS,Circuit Judge, concurring: I would limit the scope

of our jurisdiction and merits holdings in the following manner:

I.

The court holds that it has jurisdiction under the collateral

order doctrine, see Cohen v. Beneficial Indus. Loan Corp., 337

U.S. 541 (1949), over an interlocutory challenge to a protective

order allowing discovery of third-party applications submitted

to the Small Business Administration (“SBA”) with the promise

of “confidential[ity] to the extent permitted by law.” However,

there is no need to suggest that one’s party’s unilateral assertion

of a compromised “trade secret” or “privacy interest” would

suffice to meet the “importance” prong of the collateral order

doctrine. See Digital Equip. v. Desktop Direct, Inc., 511 U.S.

863, 879 (1994); United States v. Philip Morris Inc., 314 F.3d

612, 617-19 (D.C. Cir. 2003). Such liberality would not make

for a “narrow” exception to the finality rule, see Digital Equip.,

511 U.S. at 868, and could open the way for intermediate

appellate review of all manner of discovery disputes. 

The Fourth Circuit in MDK, Inc. v. Mike’s Train House,

Inc., 27 F.3d 116 (4th Cir. 1994), rejected collateral order

review of the “trade secret”-type dispute on the basis of its

concern about the difficulty of cabining the notion of a trade

secret:

The dangers of a trade secrets exception to the

nonappealability of discovery orders should be

apparent. A judicially created exception to

nonappealability for categories of sensitive information

is the quintessential slippery slope.

Mike’s Train House, 27 F.3d at 120. I share this concern, but

conclude that it is answered in this instance because the Trade

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1

 The Trade Secrets Act prohibits, in relevant respects,

employees of the federal government from

publish[ing], divulg[ing], disclos[ing], or mak[ing]

known in any manner or to any extent not authorized

by law any information coming to him in the course

of his employment or official duties . . . which

information concerns or relates to the trade secrets,

processes, operations, style of work, or apparatus, or

to the identity, confidential statistical data, amount or

source of any income, profits, losses, or expenditures

of any person, firm, partnership, corporation, or

association . . . .

18 U.S.C. § 1905. 

Secrets Act, 18 U.S.C. § 1905 (2000),1 generally protects this

type of information from disclosure when it is in the hands of a

government agency, and the agency has an important

institutional interest in full disclosure by third-party applicants

to its licensing program. 

The SBA described, through three declarations, the

sensitive nature of the commercial information contained in the

application for licensing (known as the Management

Assessment Questionnaire, or “MAQ”). As the court

acknowledges, Op. at 8-9, the MAQs contain information that

the SBA describes as of the type “routinely protected” under the

Trade Secrets Act, 18 U.S.C. § 1905, and under Exemption 4

(regarding trade secrets and commercial or financial

information) of the Freedom of Information Act (“FOIA”), 5

U.S.C § 552(b)(4) (2000). Although Diamond Ventures

disputes the sensitivity of some information requested by the

MAQs, it admits the MAQs “are likely to contain financial

information of the kind whose disclosures is prohibited by the

Trade Secrets Act if such disclosure is not ‘authorized by law.’”

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2 See Decl. of Margaret Theresa Dennin, Chief Administrative

Officer for SBA Investment Division, ¶ 5 (“SBA has never disclosed

confidential business information contained in MAQs in response to

a FOIA request . . . absent an appropriate protective order”); Decl. of

Michael K. Wyatt, former SBA General Counsel, ¶ 5 (“SBA takes the

position and advises Applicants that their [MAQ] submissions fall

within FOIA Exemption 4"); Op. at 7-8. 

Appellee’s Br. at 3-4. Given that venture capital firms may

compete one with another for private funding, the disclosure of

information of the sort requested by the MAQ could “cause

substantial harm to the competitive position of the person from

whom the information was obtained,” McDonnell Douglas

Corp. v. Dep’t of the Air Force, 375 F.3d 1182, 1187 (D.C. Cir.

2004) (citing Nat’l Parks & Conservation Ass’n v. Morton, 498

F.2d 765, 770 (D.C. Cir. 1974)), and thus would fall within the

protections of the Trade Secrets Act, which by its plain letter

prohibits release by the SBA of information on the “source of

any income, profits, losses, or expenditures of any person [e.g.,

the applicants who submit MAQs], firm, . . . or association,” 18

U.S.C. § 1905. Further, the SBA submitted declarations from

current and former SBA officials stating that the SBA has

successfully invoked FOIA Exemption 4 to protect MAQ

information from disclosure.2

 Additionally, the SBA maintains,

and Diamond Ventures does not dispute, that full disclosure of

the information requested by the MAQs is critical to the success

of the SBA’s Small Business Investment Company program.

See Appellant’s Br. at 21-22; Op. at 9. Trade Secrets Act

protections are at least co-extensive with the protections

afforded under FOIA Exception 4. McDonnell Douglas Corp.,

375 F.3d at 1185 (citing CNA Fin. Corp. v. Donovan, 830 F.2d

1132, 1151 (D.C. Cir. 1987)).

Consequently, although the protection afforded by the Trade

Secrets Act is not an evidentiary privilege, as was the case in the

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interlocutory appeals In re Sealed Case (Medical Records), 381

F.3d 1205, 1210 (D.C. Cir. 2004), and Philip Morris, 314 F.3d

at 617-18, the protections in this instance are similar to the

statutory bar in In re England, 375 F.3d 1169, 1176 (D.C. Cir.

2004). The statutory protections and the institutional interests

inform the analysis of the “importance” element of the Cohen

analysis and limit the scope of the holding on jurisdiction that is

necessary to hear this appeal. Under this analysis, the court has

no occasion to consider whether a claim that a discovery order

will compromise “privacy” or “trade secrets” gives rise to an

appealable dispute in the absence of (1) Trade Secret Act (or

comparable statutory) restrictions upon the party holding the

information, see England, 375 F.3d at 1176, and (2) a

governmental interest, similar to the SBA’s institutional and

programmatic interest in full disclosure by third parties, see Op.

at 9-10, that might be compromised were the information made

available during discovery to the principals of a potential

licensee. Here, both considerations increase the relative

importance of the interests that would potentially go unprotected

without immediate appellate review. See England, 375 F.3d at

1176; Philip Morris, 314 F.3d at 617. I would leave for another

day the question of whether the court would have jurisdiction

under the collateral order doctrine where a party points only to

the bare standard of Fed. R. Civ. P. 26(c)(7) as the source of its

protected interest from disclosure. See generally, 8 Wright,

Miller & Marcus, FEDERAL PRACTICE AND PROCEDURE, Civ. 2d

§ 2043 (2006).

II.

Turning to the merits, it suffices to hold that the district

court abused its discretion by failing to consider the legally

relevant factors. See generally Kickapoo Tribe in Kan. v.

Babbitt, 43 F.3d 1491, 1497 (D.C. Cir. 1995). As the court

concludes, Op. at 11-13, the district court failed both to address

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the SBA’s promise of confidentiality to third-party applicants

and to consider the fact that third-party applicants compete with

each other in the market for venture capital funding;

additionally, the district court considered the legally irrelevant

factor of Diamond Venture’s inability to hire an expert. In light

of these errors, it is apparent the district court failed to balance

the legally relevant factors. See Sealed Case (Medical Records),

381 F.3d at 1217; In re Sealed Case, 856 F.2d 268, 272 (D.C.

Cir. 1988); cf. LaSalle Extension Univ. v. FTC, 627 F.2d 481,

484 (D.C. Cir. 1980). The SBA does not challenge the

protective order, with its use limitation, insofar as it allows

counsel for Diamond Ventures to review the MAQs; it

challenges only the provision allowing principals of Diamond

Ventures to review the MAQs. Op. at 11 n.9. This court is not

well-positioned to conclude that the district court “overvalued

Diamond Ventures’ purported need for an expert to review the

MAQs,” Op. at 12, and particularly that we may be “confident”

that any illegal redlining that might be revealed by the MAQs

and SBA’s approval patterns may be apparent to “counsel

without an expert’s assistance,” id. at 13. Such conclusions run

counter to the district court’s findings, which are predicated

upon its greater familiarity with the litigation, and are

unnecessary, because they are not germane to the question of

whether the district court balanced the relevant factors.

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