American Tel. & Tel. Co. v. Grady

• Decision Date: 14 December 1978
• Docket Number: Nos. 78-2316,78-2317,s. 78-2316
• Citation: 594 F.2d 594
• Parties: 1979-1 Trade Cases 62,488 AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Illinois Bell Telephone Company, and Southwestern Bell Telephone Company, Petitioners, v. Honorable John F. GRADY, Judge of the United States District Court for the Northern District of Illinois, Respondent. MCI COMMUNICATIONS CORPORATION, et al., Plaintiffs-Appellees, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Illinois Bell Telephone Company, and Southwestern Bell Telephone Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 594

594 F.2d 594

1979-1 Trade Cases 62,488

AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Illinois Bell

Telephone Company, and Southwestern Bell Telephone

Company, Petitioners, v. Honorable John F. GRADY, Judge of the United States District

Court for the Northern District of Illinois, Respondent.

MCI COMMUNICATIONS CORPORATION, et al., Plaintiffs-Appellees, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Illinois Bell

Telephone Company, and Southwestern Bell Telephone

Company, Defendants-Appellants.

Nos. 78-2316, 78-2317.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 20, 1978.

Decided Dec. 14, 1978. ^*

Opinion March 1, 1979.

Certiorari Denied March 26, 1979. See 99 S.Ct. 1533.

George L. Saunders, Sidley & Austin, Chicago, Ill., for petitioners.

Robert B. Nicholson, Dept. of Justice, Washington, D. C., Chester T. Kamin, Chicago, Ill., for respondent.

Before FAIRCHILD, Chief Judge, and BAUER and WOOD, Circuit Judges.

PER CURIAM.

In the instant appeal and conditional petition for writ of mandamus appellant-petitioner challenges the propriety of an order of the district court granting the motion of the United States of America to modify a protective order which governed the use of discovered materials in MCI Communications Corp. v. ATT, 462 F.Supp. 1072. We hereby affirm the trial court's order.

I. The Procedural History

MCI Communications Corporation, a communications common carrier engaged in providing private line communications services, filed suit against the American Telephone & Telegraph Company and its affiliates on March 6, 1974, in the United States District Court for the Northern District of Illinois alleging violations of Sections 1 and 2 of the Sherman Act. On August 6, 1974, the district court entered a protective order to govern the subsequent use of "all documents and other discovery materials produced in response to any documents request made upon plaintiffs or defendants in the . . . (case) . . . and to any deposition or portion of a deposition as to which confidential status is requested by either party." The protective order was entered at the request and signed consent of the parties. From 1974 to the present, discovery on the parties has proceeded pursuant to the terms of the protective order. Discovery from nonparties has proceeded pursuant to other protective orders entered by the district court which expressly provided that the discovery materials obtained thereunder may be used solely in the preparation for trial in MCI v. ATT.

On November 20, 1974, the United States filed its Section 2 Sherman Act suit against ATT in the District of Columbia. Three stays of this suit, one on motion of the United States of America, one on motion of ATT, and one on the Court's own motion interfered with the pace of discovery until November 28, 1978.

On November 17, 1977, nonparty United States of America moved in the District Court for the Northern District of Illinois for modification of the protective order entered in MCI v. ATT on August 6, 1974, in order to allow the government access to all of the materials discovered in the MCI case. The government alleged that its action encompassed "virtually all of the anticompetitive practices of which plaintiffs complain here," and that the government would be able to gain access to those documents via discovery in the District of Columbia case but that immediate access would save time and money.

On September 11, 1978, Judge Greene granted the government's motion to permit access to discovery in USA v. ATT thus requiring MCI to provide to the government all documents "produced by defendants and requested by plaintiffs" in Litton Systems, Inc. v. ATT, No. 76 Civ. 2512 (S.D.N.Y.) and MCI Communications Corp. v. ATT, 462 F.Supp. 1072 (N.D.Ill.). ATT filed a writ of mandamus in the Second Circuit Court of Appeals naming Judge Greene as respondent in an attempt to gain review of this order. On October 31, 1978, the District of Columbia Court of Appeals denied the writ of mandamus but granted a stay for 48 hours pending application for certiorari and for emergency stay to the Supreme Court. ATT filed its emergency petition to the Supreme Court and a temporary stay was granted by Chief Justice Burger pending the filing of a response by the government. The Supreme Court later declined to continue the stay pending the disposition of the filed writ of certiorari. --- U.S. ----, 99 S.Ct. 447, 58 L.Ed.2d 420 (1978). MCI has complied with Judge Greene's order and has transferred the microfilm copies of the applicable documents to the government.

On October 9, 1978, Judge Grady granted the government's motion to modify the protective order in MCI v. ATT but stayed its order until October 23, 1978, in order to permit ATT to appeal the order. On October 16, 1978, ATT filed a motion for stay of Judge Grady's order pending disposition of its appeal, a motion for expedited consideration, its brief on appeal, and a conditional writ of mandamus directed to the consideration of the Court in the event that it would hold that Judge Grady's order is not properly appealable as a collateral order. This Court continued the stay of the district court pending disposition of the case on appeal, and heard oral argument on November 20, 1978.

II. Threshold Inquiry: Finality of The District Court Order

In Cohen v. Beneficial Industries Loan Corporation, 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), the Supreme Court delineated one of the several exceptions to the general rule that a final judgment is a prerequisite to appeal. The Supreme Court held the given order appealable

because it is a final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it.

337 U.S. at 546-47, 69 S.Ct. at 1226.

In Alexander v. United States, 201 U.S. 117, 121, 26 S.Ct. 356, 50 L.Ed. 686 (1906), the Cohen rule explicitly was not made applicable to orders respecting discovery on the ground that a witness must first refuse to produce or to testify, and must be punished for criminal contempt, before a right to review arises.

The discovery order presently under review modifies an existing protective order enabling a nonparty to obtain access to discovered materials. Because the discovery order directs MCI to turn over the discovered materials to the government, ATT does not have the option sanctioned in Alexander in order to challenge and stop the transfer of custody of the materials. For these reasons, this court finds Alexander to be inapposite, ¹ applies the "collateral order" doctrine of Cohen, and holds that the particular species of discovery order under review is final and appealable. First Wisconsin Mortgage Trust v. First Wisconsin Corp., 571 F.2d 390, 393 (7th Cir. 1978) (adopted en banc). For the same reasons, the conditional petition for writ of mandamus filed by ATT is denied.

III. The Modification of The Protective Order

The order of October 9, 1978, modifying the protective order on the motion of, and for the primary benefit of a nonparty is based on two determinations. First, the district court concluded that allowing the government's motion would not interfere with the control that either it or the District of Columbia court had over their respective cases. Second, the district court expressly declined...