Martindell v. International Tel. and Tel. Corp.

Decision Date12 March 1979
Docket NumberD,ITT-S,No. 192,192
Citation594 F.2d 291
PartiesFed. Sec. L. Rep. P 96,811 Anne C. MARTINDELL, Plaintiff, v. INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION, and Harold S. Geneen, Director, Chairman and President of ITT, Ted B. Westfall, Hart Perry and Francis J. Dunleavy, Directors and Executive Vice Presidents of ITT, Raymond S. Brittenham, Director and Senior Vice President-Law and Counsel of ITT, and Howard P. James, President ofheraton Corporation of America, Defendants-Appellees. Appeal of UNITED STATES of America. ocket 78-6074.
CourtU.S. Court of Appeals — Second Circuit

Robert G. Andary, Atty., Dept. of Justice, Washington, D. C. (Philip B. Heymann, Asst. Atty. Gen., G. Allen Carver, Jr., Atty., Dept. of Justice, Washington, D. C., of counsel), for appellant.

Phil E. Gilbert, Jr., New York City (Elihu Inselbuch, Bernard J. Rosenthal, Gilbert, Segall & Young, New York City, of counsel), for defendants-appellees Geneen, Westfall, Perry, Dunleavy and Brittenham.

Before MEDINA, MANSFIELD and MESKILL, Circuit Judges.

MANSFIELD, Circuit Judge:

The Government, although not named as a party in this private action between others, seeks to appeal from an order entered on March 23, 1978, by Judge William C. Conner of the Southern District of New York, denying it access to transcripts of pretrial depositions of some 12 persons (including certain defendants in the action), which were taken pursuant to a court-approved stipulation to the effect that the depositions should be treated as confidential and used solely by the parties for prosecution or defense of the action. We affirm.

The action is a stockholders' derivative suit on behalf of International Telephone & Telegraph Corporation (ITT) against certain ITT officers and directors, charging them with waste of ITT assets through expenditures to influence 1970 elections in In late 1977 the Government, although not a party to the suit, informally asked Judge Conner (first by telephone, then by letter dated February 13, 1978) for access to the deposition transcripts of the 12 witnesses 1 for use in the Government's investigation into possible violations of federal criminal laws (18 U.S.C. §§ 1621 (perjury), 1622 (subornation of perjury), 1001 (making of false statements to federal agency), 1505 (obstruction of justice), 371 (conspiracy)) by Messrs. Robert Berrellez, Edward J. Gerrity, Jr., and Harold S. Geneen in connection with activities related to the 1970 presidential election in Chile. The subject of the investigation was possible perjury by some or all of these three in testimony given in 1973 before a Subcommittee of the U. S. Senate investigating foreign activities of multi-national corporations and of the C.I.A. The Justice Department speculated that the pretrial deposition testimony might be relevant to its investigation into matters similar to those that had been the subject of the Martindell action and might be useful in appraising the credibility, accuracy and completeness of testimony given by witnesses in the Government's investigation or might provide additional information of use to the Government. The Government, moreover, feared that unless it could obtain the deposition transcripts, it would be unable to secure statements from the witnesses because they would claim their Fifth Amendment rights in any investigative interviews by the Government.

Chile. The suit was commenced in the Southern District of New York in June 1972 and terminated in January 1978 by a court-approved settlement and stipulation dismissing the complaint with prejudice. During the pendency of the action the plaintiffs took pretrial depositions of certain witnesses pursuant to a stipulation of confidentiality, "so ordered" by Judge Bauman, to whom the case was assigned before being transferred to Judge Conner, providing that the fruits of the depositions, including transcripts of testimony and documents furnished by the defendants, were to be made available only to the parties and their counsel and not to be used for any purpose other than the preparation for and conduct of the litigation.

At Judge Conner's request, counsel for the defendants in the action furnished the Department of Justice by letter dated December 23, 1977, with a list of 14 witnesses who had been deposed in the case. However, defendants-appellees opposed the requested turnover of the deposition transcripts on various grounds. On March 20, 1978, the Department of Justice filed criminal informations against Berrellez and Gerrity after the latter had waived their right to presentment of evidence to a grand jury and a grand jury investigating the matter had been discharged. Simultaneously the Government announced that no other actions arising out of the investigation were contemplated.

On March 23, 1978, Judge Conner denied the Government's request, holding that the deposition testimony had been given in reliance upon the protective order, thus rendering unnecessary invocation by the witnesses of their Fifth Amendment rights, that the requested turnover would raise constitutional issues, and that principles of fairness mandated enforcement of the protective order. From this decision the Government appeals.

DISCUSSION

The rather obvious threshold issue, which for some reason was not raised by appellees, is whether the Government, not being a party to this private civil action, has any right to seek a review of Judge Conner's order. If the Government had sought and obtained permission from the court to intervene in the action pursuant to Rule 24(b), F.R.Civ.P., for the limited purpose of seeking modification of the protective order, the district court could then have exercised its power under Rule 26(c), F.R.Civ.P., to modify or vacate the order and the resulting decision would be final as to the intervenor within the meaning of Title 28 U.S.C. § 1291, it being the only pending matter in the action. See Cobbledick v. United States, 309 U.S. 323, 330, 60 S.Ct. 540, 84 L.Ed. 783 (1940); United States v. United Fruit Co., 410 F.2d 553 (5th Cir.), Cert. denied, 396 U.S. 820, 90 S.Ct. 59, 24 L.Ed.2d 71 (1969). In that event both the district court and we would have all parties properly before us. Moreover, the record reveals that the plaintiffs in the Martindell action, had it not been for Judge Conner's order, were prepared to turn over copies of the deposition transcripts to the Government. The Government, therefore, would have standing in the constitutional sense to seek review of the order, since it would be adversely affected by the court's refusal to modify or vacate it, see Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); Barlow v. Collins, 397 U.S. 159, 164, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970). Since the Government is vested with both the power and the duty to obtain all relevant evidence needed for enforcement of federal criminal laws, it would also have prudential standing. See Warth v. Seldin, supra, 422 U.S. at pp. 499-501, 95 S.Ct. 2197.

The Government may not, however, simply by picking up the telephone or writing a letter to the court (as was the case here), insinuate itself into a private civil lawsuit between others. The proper procedure, as the Government should know, was either to subpoena the deposition transcripts for use in a pending proceeding such as a grand jury investigation or trial, in which the issue could be raised by motion to quash or modify the subpoena, see Rule 17(c), F.R.Crim.P., or to seek permissive intervention in the private action pursuant to Rule 24(b), F.R.Civ.P., for the purpose of obtaining vacation or modification of the protective order. See Nuesse v. Camp, 128 U.S.App.D.C. 172, 385 F.2d 694 (1967); All American Airways v. Village of Cedarhurst, 201 F.2d 273 (2d Cir. 1953); O'Keefe v. Boeing Co., 38 F.R.D. 329 (S.D.N.Y.1965); Mitchell v. Singstad, 23 F.R.D. 62 (D.C.Md.1959). Otherwise, as a non-party who would not be affected by the outcome of the action (as distinguished from a denial of intervention), the Government would neither have the right to seek relief in the action, Rules 7(b), 71 F.R.Civ.P.; Spangler v. Pasadena City Bd. of Educ., 552 F.2d 1326 (9th Cir. 1977), nor the right to appeal from a decision in the action, Utility Contractors Ass'n of New Jersey, Inc. v. Toops, 507 F.2d 83 (3d Cir. 1974). 2 Here the Government, a non-party, would not have been affected by the outcome of the Martindell action. Although a petition by a non-party for review of a district court order might be entertained as an application for a writ of mandamus against the district court, see Society of Professional Journalists v. United States District Court, 551 F.2d 559 (4th Cir. 1977), further opinion, Society of Professional Journalists v. Martin, 556 F.2d 706 (4th Cir. 1977), Cert. denied, 434 U.S. 1022, 98 S.Ct. 749, 54 L.Ed.2d 771 (1978); see also Ex parte Uppercu, 239 U.S. 435, 36 S.Ct. 140, 60 L.Ed. 368 (1915); CBS v. Young, 522 F.2d 234 (6th Cir. 1975), this extraordinary writ would hardly be available here where the only purpose was to obtain modification of a pretrial order for investigative purposes.

Notwithstanding the foregoing we are faced with what amounts to informal permission being granted by the district court to the Government to intervene for the purpose of seeking modification of the order and with appellees' failure at any time to challenge either the Government's standing or its status as a non-party. Under the circumstances, the defendants clearly waived any objections to intervention, and Judge Conner's informal entertainment of the Government's application for vacation or modification of the protective order thus amounted to a De facto grant of permissive intervention pursuant to Rule 24(b). Klein v. Nu-Way Shoe Co., 136 F.2d 986 (2d Cir. 1943); Illinois v. Sarbaugh, 552 F.2d 768, 772 (7th Cir.), Cert. denied, 434 U.S. 889, 98 S.Ct. 262, 54...

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