Friedman v. Bache Halsey Stuart Shields, Inc.
| Decision Date | 03 July 1984 |
| Docket Number | Nos. 83-1249,83-1250,s. 83-1249 |
| Citation | 738 F.2d 1336,238 U.S.App. D.C. 190 |
| Parties | , 39 Fed.R.Serv.2d 764, Fed. Sec. L. Rep. P 91,563 Samuel FRIEDMAN, Appellant, v. BACHE HALSEY STUART SHIELDS, INC., et al. Samuel FRIEDMAN, Appellant, v. BACHE HALSEY STUART SHIELDS, INC., et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia (Misc. No. 83-00027).
John D. Seiver, Washington, D.C., with whom Alan Raywid, Washington, D.C., was on the brief, for the appellant.
Helen G. Blechman, Atty., Commodity Futures Trading Com'n, Washington, D.C., with whom Kenneth M. Raisler, Acting Gen. Counsel, Commodity Futures Trading Com'n, Washington, D.C., was on the brief, for the appellee, Commodity Futures Trading Com'n.
Ruth Eisenberg, Atty., S.E.C., Washington, D.C., with whom Daniel L. Goelzer, Gen. Counsel, Linda Fienberg, Associate Gen. Counsel, and Benjamin Greenspoon, Deputy to the Associate Gen. Counsel, Washington, D.C., were on the brief, for appellee, S.E.C.
Before WILKEY and STARR, Circuit Judges, and JAMES E. DOYLE, * Senior District Judge for the Western District of Wisconsin.
Opinion for the Court filed by Senior District Judge JAMES E. DOYLE with whom Circuit Judge WILKEY concurs.
Samuel Friedman appeals an order of the United States District Court for the District of Columbia denying his motions to compel the Commodities Future Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to comply with two related subpoenas. We hold that the district court's grounds for denying the subpoenas were erroneous, vacate the judgment, and remand for further proceedings.
Friedman was a party to two civil lawsuits arising out of the silver crisis. 1 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 regulation 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 ("SEC") Investigation No. HO-1233.
(b) All indices of documents produced in connection with Investigation No. HO-1233. 2
On Monday, January 31, 1983, pursuant to Rule 45(d), Fed.R.Civ.P., the general counsel of CFTC served a notice of objection to the CFTC subpoena on the grounds that:
[T]he [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 1982 3 ... 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 Act 4 ... generally prohibits the Commission from 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 interfere with an ongoing investigation being conducted by the Commodities 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 lawsuit 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 officers of CFTC, 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 had been transcribed, the indices of all documents compiled identified over 60,000 pages of documents (located in four cities), and the indices compiled totalled over 1000 pages in length. Also, counsel for CFTC 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.
The entire operative portion of the order appealed from reads: "[P]laintiff'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." 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 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 Sec. 34.02[2.-2] (2d ed. 1983).
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, 564 F.2d 531, 541-542 (D.C.Cir.1977). Also, when the existence of such a conditional privilege is...
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