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07/03/84 Samuel Friedman, v. Bache Halsey Stuart


July 3, 1984









Wilkey and Starr, Circuit Judges, and James E. Doyle,* Senior District Judge for the Western District of Wisconsin.


Friedman was a party to two civil lawsuits arising out of the silver crisis. *fn1 The price of silver futures rose and fell dramatically in 1979-80.SEC investigated this unusual fluctuation and published its findings in October 1982. As the agency primarily responsible for regualtion of the commodity futures market, CFTC initiated its own investigation to determine whether there had been violations of the federal commodities laws. The CFTC investigation is not complete and no report has been published.

On January 26, 1983, a Wednesday, Friedman served a subpoena duces tecum et ad testificandum, issued by the United States District Court for the District of Columbia, on the general counsel of CFTC, requiring appearance on Wednesday, February 2, 1983. The subpoena demanded production of the following documents for inspection and copying:

(a) All transcripts of the 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.

(b) All indices of documents produced in connection with the investigation referred to above.

On the same date Friedman served a subpoena duces tecum et ad testificandum, issued by the United States District Court for the District of Columbia, on the Secretary of SEC, also requiring an appearance on February 2, 1983. The subpoena demanded production of the following documents for inspection and copying:

(a) Transcripts of testimony given by (1) Nelson Bunker Hunt, (2) William Herbert Hunt, (3) Lamar Hunt, (4) James Parker, and (5) Charles Mercer in connection with the investigation of the activity in the silver and silver futures markets in 1979-1980, conducted by the Securities and Exchange Commission Investigation No. HO-1233.

(b) All indices of documents produced in connection with Investigation No. HO-1233. *fn2

The [general counsel] to whom the subpoena is directed, does not have custody or control of any documents which could be deemed to be responsive to the instant subpoena. . . . Second, . . . Section 222(5) of the Futures Trading Act of 19823 . . . allows the Commission to disclose information in its possession pursuant to a subpoena, . . . only if : (1) a copy of the subpoena . . . has been mailed to the last known home or business address of the person who submitted the information that is the subject of the subpoena; and (2) at least fourteen (14) days have expired from the date of such mailing of the subpoena. . . . Further, . . . the subpoena on its face only seeks information which is protected from disclosure by the law enforcement investigatory files privilege. . . . Finally, . . . Section 8(a) of the Commodity Exchange Act4 . . . generally prohibts the Commission form disclosing such confidential information.

On Tuesday, February 1, 1983, pursuant to Rule 45(d), Fed. R. Civ. P., the secretary of SEC served an objection to the subpoena on the ground that the "disclosure of the requested documents . . . would interfer with an ongoing investigation being conducted by the Commondities Futures Trading Commission."

On Wednesday, February 2, 1983, pursuant to Rule 45, Fed. R. Civ. P., Friedman filed motions in the United States District Court for the District of Columbia to enforce both subpoenas. Accompanying these motions was a request for an expedited briefing schedule (five days) and hearing (the seventh day). The expressed reasons for requesting these accelerated procedures were the imminence of trial set for April 7, 1983, at Bache's insistence, in Bache's action against Friedman in the Florida state court and nine depositions scheduled in February 1983, commencing February 9, 1983, in the Illinois district court.

On Friday, February 4, 1983, the district court heard oral argument on the enforcement motions. The court requested a brief from CFTC by Tuesday, February 8, 1983, "supporting [its] position that [the general counsel] is not the appropriate officer to be subpoenaed, and telling the court why, and secondly, on [its] claim of privilege as being appropriately raised before the court under Black versus Sheraton in this circuit." (Tr. 26) On February 8, 1983, CFTC submitted its brief. On the same date Friedman submitted a supplemental brief in support of his motion. SEC was not required to, and did not submit a brief.

As of February 9, 1983, the documents described in the subpoenas had not been examined, one by one, by responsible members or offiers of CTFC, in response to the subpoenas, to determine whether, in the opinion of CFTC, each particular document is relevant to the subject matter of the Illinois lawsuit or is privileged, within the meaning of Fed. R.Civ. P. 26(b)(1). Counsel for the CFTC represented to the district court that as of February 8, 1983, more than 40 persons had testified in CFTC's silver investigations, more than 6000 pages of their testimony has been transcribed, the indices of all doucments compiled identified over 60,000 pages of documents (located in four cities), and the indices compiled totaled over 1000 pages in length. Also, counsel for CTFC represented, on information provided by SEC counsel, that about 200,000 pages of material had been compiled in SEC's investigation, the combined length of two sets of indices to these documents was 200 pages and a third set of indices was on tape and untranscribed.

On February 9, 1983, the district court entered its order denying Friedman's motion to enforce each of the two subpoenas. II.

The entire operative portion of the order appealed from reads: "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) ofthe Futures Trading Act does not bar enforcement of a subpoena on less than 14 days notice." We will express below our awareness of the time constraints by which the district court considered itself bound. They explain the brevity of the challenged order. That brevity requires us, however, to exercise a degree of intuition in amplifying the stated grounds, particularly the first. We address the three grounds in sequence.

A. Need: unavailability from alternative sources.

A showing of relevance can be viewed as a showing of need; for the purpose of prosecuting or defending a specific pending civil action, one is presumed to have no need of matter not "relevant to the subject matter involved in the pending action." Fed. R. Civ. P. 26(b)(1). But it is highly unlikely that relevance was a factor in the district court's decision. While it is true this or that specific document in the CFTC and SEC silver investigation files may not be relevant to the subject matter of Friedman v. Board of Trade of the City of Chicago, No. 80-C-1111 (N.D. Ill.),5 it seems clear that the bulk of the content of those investigation files is relevant. Neither CFTC nor SEC appears seriously to challenge this proposition.

Of course, the district court was well aware that since the 1970 amendment to Rule 34, a showing of good cause is not a general requirement for the discovery of documents under that rule or, by analogy, under Rule 45.4A J.MOORE, MOORE'S FEDERAL PRACTICE 34.02

We are confident that the district court's reference to availability of the materials from alternative sources was made exclusively in the context of the claim of privilege raised by CFTC and SEC.6 There surely is such a thing as a qualified common-law privilege,7 within the meaning of Fed. R. Civ. P. 26(b), for law-enforcement investigatory files. Black v. Sheraton Corp. of America, 184 U.S. App. D.C. 46, 564 F.2d 531, 541-542 (D.C. Cir. 1977). Also, when the existence of such a conditional privilege is established, there is a need to balance the public interest in nondisclosure against the need of the particular litigant for access to the privileged information. United States v. Reynolds, 345 U.S. 1, 11, 97 L. Ed. 727, 73 S. Ct. 528 (1953); Black v. Sheraton Corp. of American, 564 F.2d at 545-547. Whether the materials are available from other sources is a factor in determining the degree of the litigant's need to obtain it from the governmental agency or officer claiming the privilege. Finally, it was not clearly erroneous for the district court to conclude that as of February 9, 1983, Friedman had failed to make a strong showing of unavailability from alternative sources.

The major error we perceive in the district court's order, however, is that the existence of a qualified law-enforcement investigatory files privilege as to all of the subpoenaed documents had not been sufficiently established by CFTC so as to support wholesale and final rejection of Friedman's motion to compel compliance.

The party claiming privilege has the burden to establish its existence. Black v. Sheraton Corp. of America, 184 U.S. App. D.C. 46, 564 F.2d 531, 547 (D.C. Cir. 1977); see also Robinson v. Magovern, 83 F.R.D. 79 (W.D. Pa. 1979). It is doubtful CFTC had met the very threshold requirement of presenting the claim properly.It will not be considered unless presented in a deliberate, considered and reasonably specific manner:

Governmental privilege[s] must be formally asserted and delineated in order to be raised properly. . . .

. . . .

The claiming official must "have seen and considered the contents of the documents and himself have formed the view that on grounds of public interest they ought not to be produced" and state with specificity the rationale of the claimed privilege. . . .

. . . .

Formally claiming a privilege should involve specifying which documents or class of documents are privileged and for what reasons, especially where the nature of requested documents does not reveal an obviously privileged matter.

Kerr v. United States Dist. Ct. for North. Dist. of Cal., 511 F.2d 192, 198 (9th Cir. 1975) (cites omitted) (quoting United States v. Reynolds, 345 U.S. 1, 8 n.20, 97 L. Ed. 727, 73 S. Ct. 528 n.20 (1953)). See United States v. Winner, 641 F.2d 825, 831-832 (10th Cir. 1981); United States v. O'Neill, 619 F.2d 222, 225-227 (3rd Cir. 1980). CFTC had made a generalized claim that the requested documents are protected by a common-law law-enforcement investigatory files privilege.8 CFTC's attorney in the district court had suggested disclosure would reveal law enforcement techniques and sources: disclose strategy, procedures, and direction of the investigation, forwarn suspects, deter witnesses from providing candid testimony, invite others to seek discovery. However, the files had not been examined for this purpose by responsible members or officers of CFTC. No specific documents or classes of documents had been identified.

Until the claim of privilege has been presented to a district court with appropriate deliberation and precision and the duty of the demanding party to show his or her need for disclosure has thus been triggered,9 and until that duty has then been discharged by the demanding party, the district court is not equipped to engage in the task of identifying and weighing the competing interests.When, as here, the privilege claimed is qualified, not absolute, the process of identification and weighing cannot be avoided. Specifically with respect to the common-law law-enforcement investigatory files privilege, many factors must be addressed. A helpful list appears in Frankenhauser v. Rizzo, 59 F.R.D. 339, 344 (E.D. Pa. 1973):

(1) the extent to which disclosure will thwart governmental processes by discouraging citizens from giving the government information; (2) the impact upon persons who have given information of having their identities disclosed; (3) the degree to which governmental self-evaluation and consequent program improvement will be chilled by disclosure; (4) whether the information sought is factual data or evaluative summary; (5) whether the party seeking discovery is an actual or potential defendant in any criminal proceeding either pending or reasonably likely to follow from the incident in question; (6) whether the police investigation has been completed; (7) whether any intradepartmental disciplinary proceedings have arisen or may arise from the investigation; (8) whether the plaintiff's suit is non-frivolous and brought in good faith; (9) whether the information sought is available through other discovery or from other sources; and (10) the importance of the information sought to the plaintiff's case.

Departure from the well-established sequence of burdens of going forward in qualified privilege disputes is not justified by the fact that the Friedman subpoenas expressly describe their target as law-enforcement investigatory files. There is a considerable variety of law-enforcement investigatory files and there is a considerable variety of information within particular law-enforcement investigatory files. CFTC represented to the district court that much of the content of its silver investigation files is in the public domain, and it suggested that these non-confidential documents would be available to Friedman upon request under the Freedom of Information Act. That the qualified privilege is not claimed as to the entire files only adds to the necessity that the process of adjudication of the privelege begin with a deliberate and reasonably specific delineation of the claim by CFTC.

With the proceeding in its February 9, 1983 posture, decision on the merits on any ground and in either direction was premature, with respect to the claim of a common-law privilege for law-enforcement investigation files.

B. Section 8(a) of the Commodities Exchange Act

It would not have been premature to deny Friedman's motin on its merits on the basis that Section 8(a) of the Act10 flatly bars Friedman from access to the CFTC and SEC silver investigation files. But it would have been erroneous. The district court's second stated ground for its order was that Friedman had failed to "establish that Section 8(a) . . . does not bar disclosure of the requested materials in a pending eforcemnt case. . . ." We take this to be a holding that Section 8(a) does bar disclosure.

Although Section (8) allows CFTC to "withhold from public disclosure any data or information concerning or obtained in connection with any pending investigation of any person" (7 U.S.C. § 12(a) (Supp. 1983)), this protection does not apply to discovery requested pursuant to rules 26 and 45 Fed. R. Civ. P. "Limited disclosure in judicial proceedings, carefully curtained by judicious use of protective orders authorized by Rule 30, is not a publishing barred by this section." Freeman v. Seligson, 132 U.S. App. D.C. 56, 405 F.2d 1326, 1348 (D.C. Cir. 1968). Freeman arose before an amendment to § 8(a) added a shelter from publication for investigatory information. It addressed statutory language in the original Act protecting business transactions, trade secrets and names of customers. But the same considerations are operative to statutory shields for both types of information.

Freeman stressed the importance of the litigants' and courts' access to relevant information, a "foundation for the achievement of justice in individual lawsuits." Id. Congress must "clearly" and "strongly" indicate its intent to contradict this broad objective favoring disclosure in judicial proceedings.

In other instances where Congress has thought it necessary to protect against court use of records it has expressly so provided by specific language. We see no warrant for inferring that Congress has so elevated the interest[s] [identified in § 8(a)] that it gives them dominance over basic rules of judicial administration, especially when it is taken into account that courts can and do carefully confine disclosures as narrowly as possible.

Id. at 1351.

Statutes insulating information from publication are aimed at the broadcasting of sensitive information to the general populace; the statutes are not intended to enjoin the limited kind of disclosure encountered in judicial proceedings. The exemptions provided in the Freedom of Information Act are comparable to those in § 8(a) of the CEA in that both offer refuge from publication but not from court-supervised discovery. The relation between discovery procedures and FOIA exemptions is well-established. See, e.g., Verrazzano Trading Corp. v. United States, 69 Cust. Ct. 307, 349 F. Supp. 1401, 1403 (1972). The § 8(a) protections parallel that relationship.

If information in government documents is exempt from disclosure to the general public under FOIA, it does not automatically follow the information is privileged within the meaning of rule 26(b)(1) and thus not discoverable in civil litigation. Firestone Tire & Rubber Co. v. Coleman, 432 F. Supp. 1359 (N.D. Ohio 1976). The FOIA acts as a "floor" when discovery of government documents is sought in the course of civil litigation. Though information available under the FOIA is likely to be available through discovery, information unavailable under the FOIA is not necessarily unavailable through discovery. J. Loran, Information Disclosure in Civil Actions: The Freedom of Information Act and Federal Discovery Rules, 49 Geo. Wash. L. Rev. 843, 849 (1981).

The FOIA furthers the public's general right to know and ensures government accountability. Discovery discourages unfair surprise and delay at trial. In the FOIA context, the requesting party's need for the information is irrelevant; the most urgent need will not overcome an applicable FOIA exemption. In the discovery context, when qualified privilege is properly raised, the litigant's need is a key factor.Whether the information is disclosed depends on the relative weight of the claimant's need and the government's interest in confidentiality. Id. at 851-2. It is unsound to equate the FOIA exemptions and similar discovery privileges. We find it equally untenable to equate the § 8(a) protections from publication and similar qualified privileges from discovery.

Nevertheless, statutory publication shelters may have some application to discovery. These protected interests reflect a congressional judgment that certain delineated categories of documents may contain sensitive data which warrants a more considered and cautious treatment. In the context of discovery of government documents in the course of civil litigation, the courts must accord the proper weight to the policies underlying these statutory protections, and to compare them with the factors supporting discovery in a particular lawsuit. Id. at 852-3; see also Black v. Sheraton Corp. of America, 184 U.S. App. D.C. 46, 564 F.2d 531, 547 (D.C. Cir. 1977).

In camera inspection of allegedly privileged documents and protective orders, when appropriate, are accepted procedures in this circuit, at least where as here military and diplomatic secrets are not at issue. See, e.g., Committee for Nuclear Responsibility, Inc. v. Seaborg, 149 U.S. App. D.C. 385, 463 F.2d 788, 794 (D.C. Cir. 1971).

The courts can limit, and in actual practice do limit, the persons having access to information, their freedom to discuss the information to which they are given access, and the uses to which the information may be put. No great outcry has arisen that information thus restricted has been leaked, or put to improper uses, by attorneys who are sworn officers of the court.

Freeman, 405 F.2d at 1350. The potential harm to the government is minimal when appropriate precautions are taken. Consequently, statutes prohibiting general publication do not prohibit judicial discovery. We hold § 8(a) of the CEA does not automatically bar disclosure of the requested materials, but that the district court may consider § 8(a) as congressional underscoring of the government's interest in protecting sensitive investigatory information.

C. Section 222(5) Futures Trading Act

The district court held Friedman had failed to "establish that Section 222(5) of the Futures Trading Act does not bar enforcement of a subpoena on less than 14 days notice."

Section 222(5) requires CFTC to notify contributors of information in its possession fourteen days prior to disclosure of that information. 7 U.S.C. § 12(f) (Supp. 1983). It does not create an absolute statutory privilege or bar enforcement of the subpoena; it only delays disclosure while notification is accomplished.

Friedman contends notification is not required for the SEC documents, which are not in CFTC's possession. We agree. "The Commission shall disclose information in its possession. . . ."7 U.S.C. § 12(f) (Supp. 1983). The Act specifically does not supersede or limit the jurisdiction conferred on the Securities and Exchange Commission. 7 U.S.C. § 2 (Supp. 1983).SEC is not affected by the notification requirements of § 222(5) and CFTC is required to notify only those parties who have contributed information which is presently in CFTC's possession.

We reject Friedman's contention that § 222(5) is inapplicable to indices to documents. It is true that CFTC's themselves are not contributed by third parties. They are descriptions of material contributed by others and they reveal those contributors' identities.Consideration of fairness and of opportunity to assert individual objections to disclosure apply, therefore, to the indices as well as to the underlying documents.11

Contrary to Friedman's contention, section 222(5) is applicable to this lawsuit, though it did not become effective until January 11, 1983.12 The date of service of the subpoenas, January 26, 1983, is the operative date in the present case.

Upon reviewing Friedman's requests and CFTC's privilege claims, the district court must order CFTC to comply with the requirements of 222(5) of the Futures Trading Act before disclosing those CFTC documents, if any, ultimately judged relevant and not privilege. III

The district court was confronted by an aggressive litigator who made extreme demands upon the human resources of CFTC, SEC, and the United States District Court for the District of Columbia.

In this opinion we have remarked upon the brevity of the district court's order. We could not be more keenly aware of the reasons for that brevity. The conscientious and diligent district judge obviously considered himself bound to decide on the merits, forthwith, Friedman's motion to compel compliance as Friedman was urging him to do. We surmise that the court's sense of urgency was less a response to the prompting of an aggressive litigant than to its sense of obligation to the federal court in Illinois and the state court in Florida.

We have remarked upon the inadequacy of the CFTC and SEC claims of privilege as of February 9, 1983, the date of the district court's decision. We could not be more keenly aware of the reasons for that inadequacy. We have noted CFTC's explicit representations to the district court that it was prepared to embark upon the task of preparing and presenting to the court a deliberate and reasonable precise invocation of its claim of qualified privilege, but that the task could not be performed overnight, so to speak.

We have remarked as well upon the aggressive posture of movant Friedman in the district court.13 He contended at the time that it was justified on two grounds. One was that in the lawsuit in the federal court in Illinois in which he was plaintiff, he had scheduled depositions only a few days off. The second was the imminence of the April 11, 1983 trial in the Florida state court lawsuit in which he was a defendant. The first justification if unappealing, although it cannot be evaluated properly without considerably more information about the procedural history of the lawsuit in the federal court in Illinois. But the second justification cannot be rejected as readily as it is rejected in the dissenting opinion in this court. CFTC counsel represent to us that some time prior to February 2, 1983, when he filed his motions to compel in the federal district court in the District of Columbia, Friedman had moved to stay the proceedings against him in the Florida state court, and that the stay was granted on March 18, 1983. As of January 26, 1983, through February 9, 1983, Friedman presumably had little control over the rate of progress in the Florida litigation. He would have been open to criticism, perhaps fatal handicaps, if in that case the trial judge had considered Freidman delinquent in seeking discovery of documents needed for his defense. All Friedman could do was seek the CFTC and SEC documents as fast as he could. Had the federal district court for the District of Columbia slowed the pace in the proceeding to enforce the CFTC and SEC subpoenas, Friedman could have informed the Florida court that despite his best efforts, the matter of the discovery of the documents was in the hands of the federal court in the District of Columbia and that their availability or unavailability awaited that court's ruling.14

It was up to the federal district court in the District of Columbia to determine the time within which CFTC and SEC could reasonably be expected to present properly to the court their claims of privilege, Friedman could be heard in response, and the court could have made the usual amount of inspection of the documents in dispute. Accommodation among courts within the federal judicial system and within the state judicial system and between the two systems requires considerable sensitivity and co-operation. However, each court must insist upon the minimal time necessary to adequate presentation of the issue before it and to just resolution of the issue. In the present case, the district court did not provide CFTC and SEC sufficient time properly to present the claim of privilege. But it proceeded, on the basis of an inadequate presentation of the claim of privilege, to decide that the calim was valid. This decision on the merits against the movant Friedman was error. We appreciate that there is room for disagreement concerning the degree of justification for appellant Friedman's aggressiveness in the district court. But even if we were more disapproving of that aggressiveness than we are, we could not agree that the response should take the form of appellate affirmance of an erroneous district court ruling on the law, carefully developed over the years by this and other courts, concerning the threshold requirements for proper presentation of a claim of privilege. IV.

The order appealed from is reversed and vacated, and the case is remanded for further proceedings consistent with this opinion.


STARR, Circuit Judge, dissenting: The majority today vacates a District Court order denying Samuel Friedman's motions to compel the Commodities Futures Trading Commission and the Securities and Exchange Commission 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 thur 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, shot-gun, 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 "all 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 "all 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 January 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 Tradingg 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. 7-8. *fn3

Under the broad sweep of Rule 26(b)(1) of the Federal Rules of Civil Procedure, a party "may obtain discovery regarding any matter, not priveleged, 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, 185 U.S. App. D.C. 19, 566 F.2d 339, 343, (D.C. Cir. 1977) (quoting Hickman v. Taylor, 329 U.S. 495, 507-08, 91 L. Ed. 451, 67 S. Ct. 385, 392 (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. 7-8. 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. *fn4 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, 184 U.S. App. D.C. 46, 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. 9-12. I disagree.

To be sure, the party asserting a priviledge has the burden of establishing its existence. Black v. Sheraton Corp. of America, 184 U.S. App. D.C. 46, 564 F.2d 531, 547 (D.C. Cir. 1977). Generally, the Government must formally assert a claim of executive privilege. *fn5 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 L. 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. 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 paid 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 extradordinary circumstances of Mr. Friedman's demand for immediate production of thousands 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. 10-12. But that is surely straining at the gnat and swallowing the camel. Here, every single document supoenaed 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. *fn6 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 stragegy and direction of the investigation, and could provide suspects with sensitive enforcement information. *fn7 Given the extremely limited amount of time the agencies had to review hundred of thousands of documents contained in law enforcement investigatory files situated in four cities, see p. 2 (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 requiring 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. *fn8

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. 11-12, 14-16; 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 other sources," Maj. Op. 12, and thus that his showing of need was appallingly 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 discovery 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). *fn9 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. *fn10 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.


* Opinion for the Court filed by Senior District Judge Doyle with whom Circuit Judge Wilkey concurs. Dissenting opinion filed by Circuit Judge Starr.

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