Court Opinion

ID: 9472371
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:58:22.371421+00
Date Added: 2024-06-11T17:42:54.078866
License: Public Domain

STARR, Circuit Judge,
dissenting:
The majority today vacates a District Court order denying Samuel Friedman’s *1347motions to compel the Commodities Futures Trading Commission (“CFTC”) and the Securities and Exchange Commission (“SEC”) to comply with two extraordinarily broad subpoenas duces tecum et ad testificandum. Because I believe that the District Court was entirely correct in refusing to compel compliance with these subpoenas in the specific and extraordinary circumstances of this case, I respectfully dissent.
I
The majority’s opinion details the events that led to the District Court’s order denying appellant’s motions to compel. While it is thus unnecessary to repeat those facts, our pausing to look at the salient events highlights the extraordinarily furious pace at which appellant conducted this litigation. For the facts convincingly show that, under the circumstances as presented to the District Judge, the action which he took was entirely correct.
The majority now overturns the District Court only by blinking at the way Mr. Friedman framed this dispute. The more one examines the facts, however, the more one is led inexorably to the conclusion that the majority is sanctioning run-away, shotgun, third-party discovery that placed the agencies and the District Court under an unreasonable, adumbrated schedule.
Mr. Friedman was a party to two civil suits involving events during the “Silver Crisis of 1980.” Majority Opinion 1338 & n. 1. On January 26, 1983, Mr. Friedman served a subpoena on the General Counsel of the CFTC seeking immediate production of investigatory documents. The terms of that request merit our careful perusal: it included “[a]ll transcripts of testimony which refers or relates to or was given in connection with the investigation of the activity in the silver and silver futures markets in 1979-80 by the Commodity Futures Trading Commission” and “all indices of documents produced in connection with the [silver] investigation.” Appendix (“App,”) 11. Mr. Friedman had another agency in his sights as well. On the same day, he served a subpoena on the Secretary of the SEC seeking transcripts of testimony given by certain individuals in connection with the SEC investigation,1 and “[a]ll indices of documents produced in connection with the [silver investigation].” App. 47.
Both subpoenas sought production of the documents on February 2, 1983, literally seven days after service of the subpoenas. The documents sought were, to put it mildly, voluminous. The CFTC had compiled over 6,000 pages of testimony from 40 persons and a 1,000 page index to some 60,000 pages of documents. The SEC’s documents comprised approximately 200,000 pages and were maintained in four different cities. Maj. Op. 1340-1341; App. 199-200. Thus, on one week’s notice, appellant sought literally hundreds of thousands of pages of documents from two agencies — documents that concededly were contained in the law enforcement investigatory files of the agencies — for use in civil suits to which the agencies were not parties.2
Not surprisingly, the CFTC objected to the subpoena. Its opposition was filed on *1348January 31, 1983, five days after service of the subpoena. App. 13-20. The SEC objected on February 1, 1983. App. 52-53. On the next day, Mr. Friedman filed motions to compel, seeking an expedited argument schedule. App. 8, 44. The District Court accommodated this request and heard oral argument two days later on February 4, 1983. App. 70-106. Despite the urging of Mr. Friedman’s counsel to decide the motions without briefing, the District Court requested briefing by all parties on February 8,1983. App. 74. The District Court, in an effort to determine the issues in an orderly but prompt manner, issued its decision denying enforcement of the subpoenas on the next day, February 9, 1983. App. 270-71.
II
The District Court denied appellant’s motions to compel on three grounds, ruling that
plaintiff’s motion to compel [is] denied for failure to (1) show the unavailability of the materials from persons or businesses that have an interest or play a role in the underlying civil action, (2) establish that Section 8(a) of the Commodities Exchange Act, as amended, does not bar disclosure of the requested materials in a pending enforcement case, and (3) establish that Section 522(5) [sic] of the Futures Trading Act does not bar enforcement of a subpoena on less than 14 days notice.
App. 270-71. The majority correctly views the first basis of the District Court’s order as referring to the qualified common-law privilege for law enforcement investigatory files rather than to relevance. Maj. Op. 1340-1341.3
Under the broad sweep of Rule 26(b)(1) of the Federal Rules of Civil Procedure, a *1349party “may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved.” The broad presumption of Rule 26 in favor of discovery, however, is bounded by the limitations that “come into existence when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege.” Association for Women in Science v. Califano, 566 F.2d 339, 343 (D.C.Cir.1977) (“A WIS”) (quoting Hickman v. Taylor, 329 U.S. 495, 507-08, 67 S.Ct. 385, 391-92, 91 L.Ed. 451 (1947)). As the majority recognizes, none of the parties seriously questions the relevance of the information sought by Mr. Friedman to the underlying civil suits. Maj. Op. 1340-1341. Rather, appellant’s subpoenas implicate the limitation on discovery of privileged information embodied in Rule 26.
Over the years, federal courts have recognized a number of governmental privileges that come within the purview of this limitation.4 The government privilege most relevant to this case—the qualified privilege for law enforcement investigatory files—was expressly recognized by this court in Black v. Sheraton Corp. of America, 564 F.2d 531, 541-42 (D.C.Cir.1977). See also United States v. Winner, 641 F.2d 825, 831 (10th Cir.1981).
The majority concludes that, notwithstanding the demand by Mr. Friedman for immediate resolution of this issue, the failure of the CFTC and SEC to satisfy elaborate procedural requirements, fashioned in entirely different settings, for claiming this privilege prevented the District Court’s acceptance of this ground. Specifically, the majority faults the District Court’s determination in this respect as “premature.” Maj. Op. 1341-1343. I disagree.
To be sure, the party asserting a privilege has the burden of establishing its existence. Black v. Sheraton Corp. of America, 564 F.2d 531, 547 (D.C.Cir.1977). Generally, the Government must formally assert a claim of executive privilege.5 Courts have not, however, applied these procedural requirements inflexibly. Rather, they have taken into account the particular circumstances of each case in determining whether the privilege was properly asserted. For example, in Roviaro v. United States, 353 U.S. 53, 77 S.Ct. 623, 1 *1350L.Ed.2d 639 (1957), the Supreme Court recognized a claim of informer’s privilege based upon an objection by the Government, rather than upon an affidavit detailing formal review by the Attorney General. 353 U.S. at 55, 77 S.Ct. at 624. Similarly, this court in AWIS considered a claim of privilege based upon official confidential information, where the forms containing the confidential information were in a standard format and the United States Attorney rather than the Secretary of Health, Education and Welfare asserted the claim. 566 F.2d at 347-48. Further, in Black v. Sheraton Corp. of America, this court held that an affidavit of the Attorney General was sufficient despite its failure to claim that all documents had been examined personally. The court reasoned that since the purpose of the affidavit was to preserve more specific objections regarding particular documents, and the Attorney General had agreed to present some of the documents for in camera inspection, the privilege was properly claimed. 564 F.2d at 543. See also United States v. Winner, 641 F.2d at 832 (approving assertion of privilege by subordinate officials of Justice Department in criminal case involving Brady material); Peck v. United States, 88 F.R.D. 65, 73-74 (S.D.N.Y.1980) (upholding assertion of privilege despite Attorney General’s failure personally to review each document when Attorney General, based on representations of lower officials, decided to assert privilege).
Thus, there is no rigid approach that must be immutably followed on pain of fatal error, as if the District Judge were a pharmacist preparing a prescription. The procedures for resolving a claim of privilege do not lend themselves to slavish adherence to a handbook of procedures drawn from court opinions. This practical but critical point brings us back to the facts of this case. When the highly extraordinary circumstances of Mr. Friedman’s demand for immediate production of thousand's of investigatory documents are viewed in light of these sensible and salutary principles, it is manifest that the District Court properly considered and recognized the Government’s claim of privilege.
The majority faults the claim of privilege primarily because of the failure of CFTC officials to examine the files personally, the absence of identification of documents or classes of documents, and the general breadth of the claim of privilege. Maj. Op. 1342-1343. But that is surely straining at the gnat and swallowing the camel. Here, every single document subpoenaed by this litigant is concededly contained in the law enforcement investigatory files of the CFTC and SEC. And, it is undisputed that the CFTC was carrying on the investigation at the very time Mr. Friedman’s subpoenas arrived.6 Both the CFTC and the SEC promptly objected and claimed the law enforcement, intragovernmental, and statutory privileges. They argued, plausibly, that disclosure of the documents would reveal law enforcement techniques and sources, the strategy and direction of the investigation, and could provide suspects with sensitive enforcement information.7 Given the extremely limited amount of time the agencies had to review hundreds of thousands of documents contained in law enforcement investigatory files situated in four cities, see p. 1347, supra, it was humanly impossible to assert the privilege in the manner seemingly dictated by the majority’s decision. I simply cannot, as the majority does with beguiling ease, pass over precisely what Mr. Friedman was re*1351quiring the agencies to do in his quest for recovering money damages.
In these extreme circumstances, the CFTC’s abbreviated assertion of the privilege was properly and appropriately recognized by the District Court. At bottom, this is third-party discovery run riot, which this court now condones despite the careful work of a conscientious District Judge seeking to cope in a principled fashion with demands for immediate production that in my view were patently ridiculous. Indeed, CFTC counsel represented to the District Court that a review of the very sort now contemplated by the majority would take approximately three months; nonetheless, CFTC counsel indicated a willingness, if given time, to assert the privilege formally. App. 81-82. That offer was unsatisfactory to the appellant, however. And, to add insult to injury, after demanding that the District Court rule on the motions to compel immediately and without briefing, this commodities futures investor has now proceeded to litigate the subpoena questions on appeal for over a year.8
Because, in my view, the privilege was properly asserted, the District Court’s consideration of it as a bar to disclosure of the subpoenaed documents was also proper and in no wise premature. As the majority recognizes, a qualified privilege requires a court to balance the public interest furthered by the privilege against the need of the particular litigant for access to the privileged information. Maj. Op. 1342-1343, 1344-1345; see AWIS, 566 F.2d at 346; Black v. Sheraton Corp. of America, 564 F.2d at 555. Frequently, but not invariably, to weigh these interests a court must conduct an in camera inspection of the documents or a representative portion of them. See Black v. Sheraton Corp. of America, 564 F.2d at 544 & n. 7. (in camera inspection is the usual course).
Here, however, the District Court properly balanced these interests without conducting such an inspection. Courts have fully recognized that in camera inspection is not an inflexible requirement to be followed by rote regardless of the circumstances presented. Thus, in the leading case of Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, our Chief Judge and then District Judge Robinson reasoned that in camera inspection was unnecessary where a reasonably detailed affidavit was presented, the Government was not accused of misconduct, plaintiffs already had the bulk of the information they sought and the plaintiff made no showing of necessity. 40 F.R.D. at 327. The reasoning of Carl Zeiss powerfully obtains in this case, notwithstanding the clear factual differences. The majority concedes, as it must, that appellant has totally “failed to make a strong showing of unavailability from alternative sources,” Maj. Op. 1341, and thus that his showing of need was apallingly weak. Further, this suit, unlike .many suits in which in camera inspection is required, involves no claim of government misconduct or liability to the party seeking the documents. See, e.g., United States v. Winner, 641 F.2d at 828 (convict’s claim against prosecutor that documents showing he had been granted immunity were wrongfully withheld by the Government); Black v. Sheraton Corp. of America, 564 F.2d at 535 (plaintiff alleged illegal eavesdropping by the Government); Philadelphia Resistance v. Mitchell, 63 F.R.D. 125, 126 (E.D.Pa.1972) (plaintiffs alleged civil rights violation against the Government); Jabara v. Kelly, 62 F.R.D. 424, 427 (E.D.Mich.1974) (same). Rather, Mr. Friedman’s subpoenas subjected these agencies to third-party *1352discovery requests. In such cases, courts are quite properly more inclined to recognize a governmental privilege. 8 C. Wright & A. Miller, Federal Practice & Procedure, § 2019 at 173 & n. 30 (1970 & Supp. 1983).9 Finally, as the parties recognize, Mr. Friedman has already obtained many documents through FOIA requests; in addition, he has obtained SEC transcripts from the individuals who testified in that agency’s enforcement investigative proceedings. App. 80,191. He has thus by no stretch of the imagination been left out in the cold in his quest for agency records.
On the other side of the scale, the agencies’ interest in maintaining the integrity of law enforcement investigatory files during an ongoing investigation far outweighs Mr. Friedman’s minimal need for these documents.10 Moreover, the Chicago Board of Trade, which is one of the subjects of the CFTC’s investigation, remains a defendant in Mr. Friedman’s suit in federal court. A clear and immediate danger plainly exists that a party to the litigation in which the subpoenaed information is sought to be used could learn of its contents. In these circumstances, the District Court properly declined to conduct a rushed in camera inspection of the documents.
In sum, the claim of privilege was, in my view, properly raised by the agencies in the compressed time frame of this litigation. The District Court acted entirely properly in declining here to conduct an in camera inspection in balancing the interests, given the extremely weak showing of need demonstrated by appellant. The majority’s action, I respectfully submit, adds needlessly to the load of already overburdened district courts, faced with deciding issues as the parties frame them, without the studied leisure enjoyed in appellate chambers. Accordingly, I would affirm.

. The request for the SEC transcripts was subsequently modified because Mr. Friedman obtained them directly from the parties that testified. Maj. Op. n. 2.

. Mr. Friedman stated in his motions to compel that he needed these documents “to complete discovery and prepare for trial in Florida in April.” App. 7, 43. Trial date had been set for April 7, 1983. Id. It is entirely unclear why Mr. Friedman sat back until the eleventh hour before seeking these documents. He had filed suit against Bache Halsey Stuart Shields, Inc. (“Bache”), the Hunt brothers, and the Chicago Board of Trade ("CBOT”) in March 1980 in federal district court for the Northern District of Illinois, for losses sustained on the silver markets as a result of the Silver Crisis. Some time later. Bache brought suit against Mr. Friedman in Florida state court seeking recovery of deficits in his accounts. App. 42-43. Since the litigation surrounding Mr. Friedman's losses on the silver markets had been underway for this period of time, it is exceedingly difficult to divine why Mr. Friedman could not have sought this information earlier, thus sparing himself and the courts the strain of last second, frantic efforts to obtain obviously important information on the very eve of trial. Mr. Friedman’s counsel attempted lamely to justify the delayed requests, stating "we perhaps naively expected not to receive any opposition." App. 75. Such an expectation, however, was clearly not well-*1348grounded in the law, given the fact that Mr. Friedman sought the law enforcement files in an ongoing investigation. Cf. Reynolds v. United States, 345 U.S. 1, 11, 73 S.Ct. 528, 533, 97 L.Ed. 727 (1953) (suggesting that failure to pursue alternative means of obtaining information "might have given the respondents the evidence to make out their case without forcing the showdown of privilege”).

. In addition to the law enforcement investigatory files privilege, the CFTC and SEC argued that two other privileges barred production of the documents sought in this case. First, they contended that the governmental privilege for intragovernmental deliberative documents protected the documents from disclosure. See McClelland v. Andrus, 606 F.2d 1278, 1286-87 (D.C.Cir.1979) (recognizing governmental privilege precluding disclosure of official information that would be injurious to the consultative functions of the government); Association for Women in Science v. Califano, 566 F.2d 339, 343 (D.C.Cir.1977) (“A WIS ”); Machin v. Zuckert, 316 F.2d 336, 339 (D.C.Cir.), cert. denied, 375 U.S. 896, 84 S.Ct. 172, 11 L.Ed.2d 124 (1963); Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 40 F.R.D. 318, 324-26 (D.D.C.1966), aff’d mem. sub nom. V.E.B. Carl Zeiss, Jena v. Clark, 384 F.2d 979 (D.C.Cir.), cert. denied, 389 U.S. 952, 88 S.Ct. 334, 19 L.Ed.2d 361 (1967). The agencies also contended that the official information or required reports privilege, which recognizes that the Government and citizens have a shared privilege in certain types of confidential information provided to the Government by citizens. See Baldrige v. Shapiro, 455 U.S. 345, 360, 102 S.Ct. 1103, 1112, 71 L.Ed.2d 199 (1982); A WIS, 566 F.2d at 343 (citing Black v. Sheraton Corp. of America, 564 F.2d 531, 541-42 (D.C.Cir.1977)); see generally Note, "Discovery of Government Documents and the Official Information Privilege," 76 Colum.L.Rev. 142 (1976). The CFTC and the SEC argued that section 8(a) of the Commodities Exchange Act (“CEA”), 7 U.S.C. § 12(a) (1982), as amended by section 222(1) of the Futures Trading Act ("FTA”) gave rise to the official information privilege in this case. App. 209-12. Finally, they argued that section 222(5) of the FTA, 7 U.S.C. § 12(f) (Supp. V 1983), which requires that the CFTC notify suppliers of information in its possession fourteen days prior to disclosure, barred disclosure of the documents within the timeframe set by appellant.
I agree with the majority that section 8(a) of the CEA, as amended by section 222(5) of the FTA, does not create a flat prohibition against disclosure of information submitted to the CFTC. As the majority observes, the reasoning of this court’s decision in Freeman v. Seligson, 405 F.2d 1326 (D.C.Cir.1968), applies with equal force to amended section 8(a). I further concur in the majority’s ruling that the 14-day disclosure rule applies to all documents, including indices, sought by Mr. Friedman from the CFTC and that it does not apply to the SEC documents.
The majority, however, refrains from addressing the intragovernmental deliberations privilege, perhaps because it concludes that both the law enforcement investigatory file privilege and this privilege were not properly raised by the *1349agencies. Nonetheless, it is clear that on remand, the CFTC and SEC remain free to assert this privilege as a basis for withholding at least some of the documents sought by appellant’s subpoenas. For instance, it seems highly likely that the privilege would be implicated by disclosure of the indices that describe the numerous documents and testimony compiled by the CFTC and the SEC. Cf. United States v. Winner, 641 F.2d 825, 831 (10th Cir.1981) (observing that the Government may assert both law enforcement investigatory and intragovernmental deliberation privileges with regard to ongoing grand jury proceedings).

. A qualified executive privilege permits the government to restrict disclosure of documents that contain military or diplomatic secrets. United States v. Reynolds, 345 U.S. 1, 11, 73 S.Ct. 528, 533, 97 L.Ed. 727 (1953). Similarly, a qualified informer’s privilege protects from disclosure the identity of persons who furnish information to the Government regarding violations of the law. Roviaro v. United States, 353 U.S. 53, 59-62, 77 S.Ct. 623, 627-28, 1 L.Ed.2d 639 (1957); see also Black v. Sheraton Corp. of America, 564 F.2d 550, 553-55, 97 L.Ed. 727 (D.C.Cir.1977). Courts have also recognized a governmental privilege protecting disclosure of documents that would reveal policy deliberations of the Government. See n. 3 supra and cases cited therein.

. In the ordinary case, the head of the department with control over the matter accomplishes this by executing an affidavit showing that the officer has personally reviewed the documents and considered the claim of privilege. See Reynolds v. United States, 345 U.S. 1, 7-8, 73 S.Ct. 528, 531-32, 97 L.Ed. 727 (1953); Black v. Sheraton Corp. of America, 564 F.2d 531, 543-44 (D.C.Cir.1977). This requirement ensures that the Government, rather than another party seeking to prevent disclosure, claims the privilege, and that it is not lightly raised. See AWIS, 566 F.2d at 348; V.E.B. Carl Zeiss, 40 F.R.D. at 326 . n. 33. Moreover, it enables the courts to determine whether the privilege is properly claimed as to the particular documents, especially when the Government seeks to withhold the documents in their entirety and also to avoid in camera inspection by the reviewing court. See Reynolds v. United States, 345 U.S. at 8, 73 S.Ct. at 532. Similar purposes underlie the presumption in favor of in camera inspection. See n. 9, infra.

. Although the SEC’s investigation had concluded and its report had issued, it had given the CFTC access to all its files for use in the CFTC investigation. App. 83-86.

. The majority suggests that the fact that some documents have been disclosed through FOIA requests supports the conclusion that a more detailed claim of privilege is required to enable the court properly to evaluate the claim. Contrary to the majority's suggestion, however, the CFTC was apparently referring to documents already disclosed under FOIA; these documents obviously were not included within the scope of the agencies' claim of privilege.

. It is especially ironic to note that while the District Court’s order denying the appellant’s motions to compel has been on appeal in this court, Mr. Friedman has been waiting for his documents for over a year. During that time, the Florida action that prompted the emergency motions to compel in the first place has been settled, and only Chicago Board of Trade remains a defendant in the civil action in Illinois. See n. 2 supra. Thus, the appellant’s need for these documents has all but disappeared, while this appeal obviously has not. It bears repeating that if appellant had proceeded with this third party discovery in a more orderly fashion, much of the difficulty engendered by this litigation could have been avoided completely.

. When it is not a party to the litigation, the Government would seem to have little interest in blocking disclosure of documents by asserting privileges that are not, in fact, valid. Thus, the concern that underlies in camera inspection — ensuring the validity of the Government’s privilege claim — is clearly much more limited when the agency is a non-party.

. This interest includes preventing the subjects of that investigation from learning agency techniques, sources, direction and strategy.