Northrop Corp. v. McDonnell Douglas Corp.

• Decision Date: 28 December 1984
• Docket Number: No. 84-5215,84-5215
• Citation: 751 F.2d 395,243 U.S.App.D.C. 19
• Parties: , 40 Fed.R.Serv.2d 1042, 1985-1 Trade Cases 66,330, 17 Fed. R. Evid. Serv. 150 NORTHROP CORPORATION v. McDONNELL DOUGLAS CORPORATION, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 395

751 F.2d 395

243 U.S.App.D.C. 19, 40 Fed.R.Serv.2d 1042,

1985-1 Trade Cases 66,330,

17 Fed. R. Evid. Serv. 150

NORTHROP CORPORATION v. McDONNELL DOUGLAS CORPORATION, Appellant.

No. 84-5215.

United States Court of Appeals District of Columbia Circuit.

Argued Oct. 29, 1984.

Decided Dec. 28, 1984.

Robert M. Lucy, St. Louis, Mo., with whom Daniel C. Schwartz and Penny Q. Seaman, Washington, D.C., were on the brief, for appellant.

Freddi Lipstein, Atty., Dept. of Justice, Washington, D.C., with whom Richard K. Willard, Asst. Atty. Gen., Dept. of Justice, Joseph E. diGenova, U.S. Atty., and Barbara L. Herwig, Atty., Dept. of Justice, Washington, D.C., were on the brief, for appellee.

Before WILKEY ^*, WALD, and SCALIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

McDonnell Douglas Corporation ("MDC") appeals from an order of the United States Court for the District of Columbia denying MDC's motion to compel discovery and quashing subpoenas duces tecum directed to the United States Departments of Defense ("DOD") and State ("State"). We affirm the district court's order as it applies to the subpoena directed to DOD, but vacate and remand the order as it applies to the subpoena directed to State.

I. BACKGROUND

MDC's pursuit of discovery against DOD and State stems from its ongoing litigation with Northrop Corporation ("Northrop") regarding the development and sale of variations of the YF-17 military aircraft, Northrop Corp. v. McDonnell Douglas Corp., CA No. 79-04145R (C.D.Cal. filed Oct. 26, 1979). The United States is not a party to this litigation. The facts of the underlying action, which is being heard by the United States District Court for the Central District of California, are set out in Northrop Corp. v. McDonnell Douglas Corp., 498 F.Supp. 1112 (C.D.Cal.1980), rev'd in part and remanded, 705 F.2d 1030 (9th Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 156, 78 L.Ed.2d 144 (1983); we present here only a brief summary of the facts relevant to this appeal.

Northrop and MDC, two major defense contractors, entered into a "teaming agreement" to develop two variations of the YF-17, one to be land-based and the other for use on aircraft carriers (the latter was purchased by the U.S. Navy and designated the F-18). According to the terms of the agreement, MDC was to be the prime contractor for the domestic and foreign sales of the aircraft carrier variation, with Northrop acting as a substantial subcontractor, and Northrop was to be the prime contractor for the land-based variation of the YF-17. While MDC has sold its F-18s to the U.S. Navy and at least three foreign governments, Northrop has not been able to sell any of its variations of the aircraft. Brief for Appellant at 5-6. Northrop sued MDC claiming, inter alia, that MDC violated the terms of the teaming agreement, interfered with Northrop's efforts to sell its version of the YF-17, and violated the antitrust laws. MDC has asserted as part of its defense that Northrop's inability to sell any of the land-based YF-17s is the result of actions by the United States government, not MDC. In furtherance of that defense, on December 21, 1983, MDC subpoenaed DOD, State, and the Departments of the Air Force and the Navy for documents relating to sale of various military equipment to Iran, Canada, Australia, Spain, Turkey, Sweden, Israel and the Federal Republic of Germany, generally covering the period from January, 1977, to the present. ¹

The Departments of the Air Force and the Navy complied with the subpoenas to MDC's satisfaction. DOD produced 3000 pages of documents to MDC and, on March 26, 1984, claimed that 1200 more pages of responsive documents were privileged as state or military secrets. Brief for Appellant at 14. Initially, State also produced some documents, but then on January 31, 1984, filed an objection to the subpoena on the grounds of burdensomeness. State ultimately claimed that 967 cubic feet of documents would have to be searched to comply with the subpoena, and that such a search would involve hundreds of worker hours. Further, State claimed that many of the responsive documents would be classified and subject to the state secrets or deliberative process privileges, and that a declassification review would involve yet additional hundreds of worker hours. Appendix to Brief for Appellant ("Appendix") at 272, 277.

In response to DOD's claim of privilege and State's claim of oppressiveness, MDC moved to compel production of the documents from both parties. The district court held a one-day hearing on the motion. In a one-page order the court denied MDC's motion to compel and quashed the subpoenas. This appeal followed.

II. ANALYSIS

MDC claims that the district court erred in quashing the subpoenas directed to DOD and State. ² As to DOD, MDC contends that the district court, given MDC's representations of the importance of the documents to MDC's defense, should have conducted an in camera review of the documents to determine whether the state secrets privilege was properly invoked. ³ MDC further asserts that the district court should not have permitted DOD's assertion of the state secrets privilege because it did not establish the requisite likelihood that harm would result in the event of disclosure. ⁴ As to State, MDC appeals the court's order quashing the subpoena on grounds of burdensomeness. According to MDC, State did not adequately demonstrate the oppressiveness required to quash the subpoena, particularly in light of MDC's asserted need for the documents, the unavailability from other sources of the information contained in those documents, and the complexity of the underlying Northrop litigation.

In evaluating a trial court's exercise of discretion in discovery matters, we have observed that

[a] district court has broad discretion in its resolution of discovery problems that arise in cases pending before it.... [T]he scope of appellate review is equally narrow when the discovery pertains to litigation pending elsewhere.

In Re Multi-Piece Rim Products Liability Litigation, 653 F.2d 671, 679 (D.C.Cir.1981). We may reverse the trial court only if it has abused its discretion; that is, if its actions were clearly unreasonable, arbitrary or fanciful. Id. Giving the district court due deference, we find it properly exercised its discretion in accepting DOD's claim of privilege, but that its action in quashing the State subpoena in its entirety, without adequate consideration of whether it might be modified so as to diminish the burden, was unreasonable and an abuse of discretion. ⁵

A. DOD's Claim of Privilege

The "state secrets" privilege asserted by DOD is a privilege developed in common law protecting information vital to the nation's security or diplomatic relations. ⁶ See Advisory Comm. Note to Proposed Fed.R.Evid. 509, reprinted in 56 F.R.D. 194, 252 (1972); E. Cleary, McCormick on Evidence Sec. 107 (3d ed. 1984). It is an absolute privilege which, when properly asserted, cannot be compromised by any showing of need on the part of the party seeking the information. The seminal judicial statement on the privilege appears in United States v. Reynolds, 345 U.S. 1, 73 S.Ct. 528, 97 L.Ed. 727 (1953). Reynolds establishes the procedure which must be followed for the privilege to be properly invoked: " There must be a formal claim of privilege, lodged by the head of the department which has control over the matter, after actual personal consideration by that officer." Id. at 7-8, 73 S.Ct. at 531-532 (footnotes omitted). The inherent dilemma presented by the privilege, as recognized by the Reynolds Court, is that a court must "determine whether the circumstances are appropriate for the claim of privilege, and yet do so without forcing a disclosure of the very thing the privilege is designed to protect." Id. at 8, 73 S.Ct. at 532 (footnotes omitted).

We reiterate at the outset that a party's need for the information is not a factor in considering whether the privilege will apply. As we have stated,

courts in evaluating claims for the privilege may take cognizance of the need for the information demonstrated by the party seeking disclosure, [but] such need is a factor only in determining the extent of the court's inquiry into the appropriateness of the claim. Once the court is satisfied that the information poses a reasonable danger to secrets of state, "even the most compelling necessity cannot overcome the claim of privilege."

Halkin v. Helms, 690 F.2d 977, 990 (D.C.Cir.1982) (footnote omitted) ("Halkin II ") (quoting Reynolds, 345 U.S. at 11, 73 S.Ct. at 533). Therefore, MDC's representations of the importance of the government documents to its defense in the Northrop litigation are relevant only to the question of whether the district court adequately assessed DOD's assertion of the privilege. Reviewing the documents submitted to the court in support of DOD's claim, we find that the district court did not abuse its discretion in holding that the privilege was adequately asserted.

According to the procedure established by Reynolds, DOD properly made its claim to the state secrets privilege. In an affidavit, the head of the department, Secretary of Defense Weinberger, stated that he had reviewed a representative sample of the documents as well as affidavits of staff members who had received all of the documents, and based on this knowledge he "assert[ed] a formal claim of privilege in order to protect certain military and state secrets relating to the national defense and the national security of the United States ...." Affidavit and Claim of Privilege of the Secretary of Defense ("Weinberger Affidavit") p 2, Appendix at 282-83. The affidavit states that "[t]he Department of Defense has in its possession seven linear inches of classified documents responsive to the subpoena." Weinberger Affidavit p 5, Appendix at 284. The documents, "all of which have been classified pursuant...