Black v. Sheraton Corp. of America

• Decision Date: 22 August 1977
• Docket Number: No. 75-2039,75-2039
• Citation: 184 U.S.App.D.C. 46,564 F.2d 531
• Parties: Fred B. BLACK, Jr. v. SHERATON CORPORATION OF AMERICA et al. Appeal of UNITED STATES of America.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 531

564 F.2d 531

184 U.S.App.D.C. 46

Fred B. BLACK, Jr. v. SHERATON CORPORATION OF AMERICA et al. Appeal of UNITED STATES of America.

No. 75-2039.

United States Court of Appeals District of Columbia Circuit.

Argued Nov. 1, 1976.

Decided Aug. 22, 1977.

Neil R. Peterson, Atty., Dept. of Justice, Washington, D. C., with whom Rex E. Lee, Asst. Atty. Gen., and John J. Farley, III, Atty., Dept. of Justice, Washington, D. C., were on the brief, for appellant.

Gerald S. Rourke, Washington, D. C., for appellee, Black. Samuel M. Bradley and Edward P. Morgan, Washington, D. C., were also on the brief for appellee, Black.

Peter R. Sherman, Washington, D. C., entered an appearance for appellee, Sheraton Corp. of America, et al.

Before LEVENTHAL, ROBINSON and WILKEY, Circuit Judges.

Opinion for the Court filed by LEVENTHAL, Circuit Judge.

LEVENTHAL, Circuit Judge:

Plaintiff is a Washington lobbyist who fell from grace in 1963-64. Plaintiff claims that his loss of employment and reputation was caused by government dissemination of information gained from an illegal eavesdrop in 1963. Plaintiff sought discovery of certain government documents in order to prove this theory. The government, which had disclosed logs of its surveillance and memoranda based thereon, declined to produce the particular documents except to the district court in camera. The district court rejected this request, required production, and following non-production it imposed sanctions, and ultimately held the government liable to the plaintiff for $903,232 in damages. In our view the government made a sufficient showing of a pertinent privilege to call upon the district court to undertake an in camera verification. We vacate the judgment and remand for further proceedings.

I. BACKGROUND

A. Factual Background

Plaintiff Fred B. Black, Jr. was a Washington lobbyist affiliated with Robert G. ("Bobby") Baker, Secretary to the Majority of the Senate. Black's average annual reported taxable income for the years 1958-62 was $216,000.

On February 7, 1963, FBI agents installed a microphone through the common wall of a room adjoining Black's suite at the Sheraton Carlton Hotel in Washington, D.C. By means of this device, the FBI agents secretly listened to Black's conversations and activities until April 25, 1963.

At about this time, Black was beset by a number of other difficulties. The IRS had been investigating him for income tax evasion for the past two years. In December of 1962, the IRS completed its investigation and recommended that the Justice Department undertake a criminal prosecution. Approval was sent to the U.S. Attorney in January of 1963, and Black was indicted on March 29, 1963.

In 1963 Black also became entangled in the Senate investigation of Bobby Baker. Both Black and Baker apparently owned interests in Serv-U Corporation. A competitor of Serv-U, Capitol Vending Corporation, filed suit against Black and Baker charging that the two had conspired to deprive Capitol of a contract with Melpar, Inc. The complaint alleged that Black had persuaded one of his major clients, North American Aviation, to pressure its subcontractor Melpar to deny the contract to Capitol.

Bobby Baker resigned from his office in October, 1963, and hearings were conducted in late 1963 and 1964. Black's testimony, which was released to the public on February 21, 1964, showed that he had a consulting contract with Melpar and an interest in Serv-U, both of which had contracts with North American Aviation. One week later North American fired Black for conflict of interest.

Three months later, Black was convicted of income tax evasion. That conviction was affirmed by this court in 1965. 122 U.S.App.D.C. 347, 353 F.2d 885 (1965). By this time Black was unable to obtain employment as a Washington representative, and his income for 1965 amounted to only $4,500.

In May of 1966, Solicitor General Thurgood Marshall advised the Supreme Court of the 1963 eavesdropping on Black's hotel suite, which covered conversations with his attorney. The Supreme Court vacated and remanded for a new trial. Black v. United States, 385 U.S. 26, 87 S.Ct. 190, 17 L.Ed.2d 26 (1966). Upon remand, the district court found in a suppression hearing that the government's evidence had not been derived from the eavesdropping. On retrial, however, defendant Black was acquitted.

B. Procedural Background

Black filed this action in 1967 seeking monetary recovery for injuries allegedly caused by the concededly illegal eavesdropping operation. Black's amended complaint, filed in 1970, invoked theories of trespass, invasion of privacy by intrusion, invasion of privacy by publication and violation of constitutional rights. Black alleged that the information obtained by means of the eavesdrop had been disseminated to (1) the grand jury which indicted him for tax evasion; (2) his antagonists in the Capitol Vending suit; (3) the Senate Committee which investigated Black and Baker; and (4) various agencies of the federal government, which then allegedly "blackballed" Black with his former employers. Black further alleged that the government intended to use the information gathered by the eavesdrop to coerce Black into becoming an informer for an FBI investigation into organized crime in Los Angeles. Black sought damages for his loss of valuable contacts with major corporations, the destruction of his means of livelihood, his loss of his good name, and mental suffering and anguish.

A critical issue from the beginning of this litigation is the extent to which plaintiff may be permitted access to the FBI files. The FBI files contain several different types of documents. The FBI agents monitoring Black's suite kept contemporaneous logs in which they summarized or quoted from his conversations. These logs were submitted to their superiors, and the eavesdrop information was then included in "airtels" internal FBI documents disseminated by the Washington field office to FBI headquarters and to various other field officers. When the Washington office felt that it had obtained a "lead," e.g., the name of an affiliated individual, it asked the relevant field office to obtain more information, e.g., the occupation or activities of the named individual. The field office then responded with an "airtel." Information obtained from the investigation was ultimately incorporated into two lengthy "reports," dated April 17, 1963 and July 12, 1963. These were transmitted by the FBI to the Criminal Division of the Justice Department. There were also two "memoranda" sent by the FBI to the Attorney General with copies to the Criminal Division. The FBI files on Black also included, of course, many documents of a noninvestigative nature recommendations, evaluations, suggestions and documents related to the earlier criminal litigation and the current civil litigation.

At the outset, the United States made available to the plaintiff (1) all logs of the surveillance; (2) all summary airtels based on the logs and sent by the Washington Office to other locations; (3) the two memoranda from the director of the FBI advising the Attorney General of the information which had been obtained from the surveillance; and (4) those portions of the two FBI reports to the Criminal Division which contained information directly obtained from the surveillance.

In 1970 plaintiff sought to discover from the FBI the extent of the investigation of Black at the time the eavesdrop commenced, and the nature of the information which had been obtained from running down the leads gained from the eavesdropping. Judge Sirica held that these materials in the government file were privileged. Black v. Sheraton Corp., 50 F.R.D. 130 (D.D.C.1970). He reasoned that the public interest in secrecy for investigative files outweighed plaintiff's "insufficient showing of necessity." He noted that the government had offered to permit plaintiff to depose any of its agents to discover whether they were furnished with information obtained from the surveillance. In this way Black was to trace the dissemination of the eavesdrop information.

In April, 1971, the government moved for partial summary judgment with respect to Black's claims that eavesdrop information had been disseminated to the grand jury, the Senate Committee and the Capitol Vending antagonists. The government presented affidavits and testimony from FBI personnel that none of the eavesdrop information had been disseminated to these third parties and statements from the people involved that none had been received. Plaintiffs contended that he was unable to trace the eavesdrop material any further by means of depositions and that summary judgment in the absence of further discovery was unfair. The district court granted the motion for partial summary judgment and this court summarily affirmed. (D.C.Cir. No. 71-1639, Sept. 21, 1972).

The case was subsequently reassigned to Judge Richey, who held hearings on the still pending discovery motions. Plaintiff argued that because the FBI reports had been sent to the Organized Crime section of the Criminal Division, they may have been accessible to other law enforcement agencies. On this basis plaintiff claimed to have made a stronger showing of need for broader discovery.

On July 10, 1973, Judge Richey ordered the government to produce for inspection and copying:

(1) all documents containing leads obtained from the eavesdropping, including FBI reports of April 17, 1963 and July 12, 1963;

(2) all communications received in response to the eavesdropping material, including any airtels received by the Washington, D.C., Field Office of the FBI in response to airtels sent out by such office;

(3) communications between the Justice Department and FBI and Senate Rules Committee, and all communications between the Justice Department and FBI and any other agency of the executive branch, containing or relating to information obtained directly or indirectly from the...