Court Opinion

ID: 7838391
Source: CourtListenerOpinion
Date Created: 2022-09-08 16:44:51.108888+00
Date Added: 2024-06-11T15:56:12.774556
License: Public Domain

McGOWAN, Circuit Judge,
dissenting:
By reference to what is in the public record of this case, I can conclude only that in 1970 the Commission directed its staff to transmit with all recommendations for the institution of formal proceedings the arguments of the prospective respondents against such action. It is obvious that that policy could not be effectuated without notification being given to persons who were the targets of the staff investigations. That policy, although never publicly revealed, was in effect at the times relevant to this appeal, and on its face does not admit of any exceptions. We know also, however, that in a public release issued in 1972 the Commission characterized the practice it had been following as one permitting persons involved in a staff investigation, on their request, to submit to the Commission statements before staff recommendations for formal proceedings would be acted upon; and in that context the Commission stated the obviously correlative proposition that the staff, “in its discretion, may” take the necessary step of notifying investigation targets of the nature of the violations involved and the time available to them for making a submission to the Commission.
But whether the staff did or did not have discretion at the times here in issue does not seem to me determinative of this appeal. For even if discretion existed vis-avis the Commission, in relation to those under investigation, problems of procedural fair play swarm around the question of how and why that discretion is exercised in a particular case. That is especially true when, as here, professional advisers of clients under investigation are the unknowing targets. And it is not only the interests of those advisers that are affected adversely but those of the clients themselves. Is it seriously to be supposed that the lawyers here involved, if they had been apprised of their target status, would not have immediately withdrawn as counsel for the clients and, indeed, retained counsel for themselves?
I am not prepared to say that the defense in issue should have been stricken by the district court without more exploration on the record of both the authority and the justifications for the staff’s proceeding as it did in this case. That exploration can, in my judgment, best be achieved by directing the reinstatement of the defense in question at the present stage of the litigation, and of ventilating its merits or demerits at trial or, at the least, after further opportunity for discovery as to exactly what the Commission’s policy was and the standards by which it was being applied generally as *60well as in this particular instance. As a start in this direction, the district court should make available to defendants the materials examined by it in camera.