A. Hirsh, Inc. v. US

• Decision Date: 27 March 1987
• Docket Number: Court No. 86-03-00331.
• Citation: 657 F. Supp. 1297
• Parties: A. HIRSH, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

657 F. Supp. 1297

A. HIRSH, INC., Plaintiff, v. UNITED STATES, Defendant.

Court No. 86-03-00331.

United States Court of International Trade.

March 27, 1987.

Mandel Resti Pollack & Borakove, James A. Resti and Thomas J. Kovarcik, New York City, and Fell & Spalding, David B. Hirsh, Philadelphia, Pa., for plaintiff.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ.Div., U.S. Dept. of Justice (Sheila N. Ziff); U.S. Intern. Trade Com'n, Kristian Anderson; and Office of the Deputy Chief Counsel for Import Admin., U.S. Dept. of Commerce, Polina Smith, Washington, D.C., for defendant.

OPINION & ORDER

AQUILINO, Judge:

In this action seeking judicial review of an antidumping-duty order, the plaintiff has moved the court for access on the part of its in-house lawyer to the confidential information which comprises the nonpublic portion of the administrative record submitted to or produced by the International Trade Administration, U.S. Department of Commerce ("ITA") and the International Trade Commission ("ITC") in connection with their investigations of natural-bristle paint brushes from the People's Republic of China.¹

Background

In its motion for disclosure hereinafter "Plaintiff's Motion", the plaintiff argues essentially that (1) for financial reasons the action cannot be prosecuted without inside counsel's complete involvement in the litigation, which is dependent upon the granting of the access requested; (2) denial of access should not "turn upon the mere categorization of counsel as in-house"²; and (3) that lawyer's nonpolicy role within the plaintiff company and his willingness to adhere, in accordance with the standards of the legal profession, to a carefully-drafted protective order obviates any possibility of misuse or inadvertent disclosure of the information.

The defendant objects to authorizing such access to the attorney in question "not simply because he is general counsel and vice president of plaintiff"³. Rather, defendant's position is stated as follows:

... Counsel's close family relationship to the competitive decisionmakers in the plaintiff company, begets an unacceptable risk of inadvertent disclosure. That factor, in addition to the appearance of impropriety that may be created by his obtaining access to confidential data concerning competitors of his family's business, requires denial of the motion for disclosure with respect to David B. Hirsh.⁴

Notwithstanding the parties' variant characterizations of the role of the attorney in question, the following facts are seemingly not at issue. David B. Hirsh, Esq. is general counsel and chief legal officer of the plaintiff A. Hirsh, Inc.⁵, a corporation that imports the paint brushes subject to the anti-dumping-duty order and that is owned and operated by Mr. Hirsh's father, Erwin Hirsh, who manages the firm along with David's brother. See Hirsh Affidavit, para. 5. From February 20, 1981 until July 28, 1986, David Hirsh was empowered by plaintiff's board of directors "to perform the duties and exercise the powers of the presidency in the absence or disability"⁶ of his father. Apparently at David Hirsh's request, this power was rescinded by board resolution during his preparation of the motion now under consideration. See id., para 6.

Discussion

The court already has granted plaintiff's request for disclosure to its retained counsel, James A. Resti, Esq., under protective order pursuant to 19 U.S.C. § 1516a(b)(2)(B). The plaintiff proposes such an order in conjunction with this motion differing only in its inclusion of Mr. Hirsh. However, the court is not persuaded that this relief is necessary or appropriate.

I

The authority to control access to the administrative record is found in the referenced section 1516a(b)(2)(B), which states:

Confidential or privileged material. The confidential or privileged status accorded to any documents, comments, or information shall be preserved in any action under this section. Notwithstanding the preceding sentence, the court may examine, in camera, the confidential or privileged material, and may disclose such material under such terms and conditions as it may order.

There is no question that this statute provides the court with broad discretion in controlling access to confidential materials. See, e.g., U.S. Steel Corporation v. United States, 730 F.2d 1465, 1467, 1469 (Fed.Cir. 1984); Chevron U.S.A. v. United States, Slip Op. 87-13 at 5, 7 (Feb. 6, 1987) Available on WESTLAW DCTU, database; Roquette Freres v. United States, 4 CIT 239, 240, 554 F.Supp. 1246, 1248 (1982). In exercising its discretion, the court must balance the competing interests of a party's need for the information against the potential harm in disclosing it, guided by the following considerations:

... (1) the needs of the litigants for data used by the Government in order to adequately respond to the administrative agency finding, (2) the needs of the Government in obtaining confidential information from businesses in future proceedings, and (3) the needs of the disclosing parties to protect from disclosure information which, in the hands of a competitor, might injure their respective positions in the industry.⁷

Plaintiff's need for access to all portions of the administrative record is evident from the nature of the judicial review process, as contemplated by 19 U.S.C. 1516a(b), which confines the court's review of this action to that record.⁸ To meaningfully challenge agencies' determinations, access to the information used by them is essential and will be granted unless outweighed by "`the public interest in protecting confidential business information, recognized by section 516A(b)(2)(B) and inherent in an agency's ability to effectively perform its investigative duties' under the antidumping law." American Spring Wire Corp. v. United States, 5 CIT 256, 257, 566 F.Supp. 1538, 1540 (1983), quoting Nakajima All Co., Ltd. v. United States, 2 CIT 170, 174 (1980) Available on WESTLAW DCTU database. That information includes trade secrets, cost of production and distribution, inventories, production capacity, profits and losses, customer lists and other matters, the disclosure of which could cause substantial harm to the disclosing party or to the agency. See 19 C.F.R. §§ 201.6, 353.29.

On the other hand, where the court grants access to this data for litigation purposes, "the risk of the competitor's obtaining an unfair business advantage may be substantially increased." Akzo N.V. v. U.S. International Trade Commission, 808 F.2d 1471, 1483 (Fed.Cir.1986). Any rights of the injured party which would arise upon either the advertent or the inadvertent use of confidential information in violation of a protective order could not redress the irreparable harm already incurred. See id.

To guard against that possibility during the judicial review process, Congress included in the Trade Agreements Act of 1979 ("1979 act") a "special provision ... for preserving the confidential or privileged status of any materials contained in the record". S.Rep. No. 249, 96th Cong., 1st Sess. 248 (1979), U.S. Code Cong. & Admin. News 1979, pp. 381, 634. That provision of the act, 19 U.S.C. § 1516a(b)(2)(B), supra page 4, prohibits the release of those portions of the administrative record designated "confidential" unless it is under terms ordered by the court.

Consistent with congressional concern over confidentiality, caution is the necessary approach when ordering disclosure of privileged information to anyone. This policy is reflected in numerous decisions on the issue of access — decisions which reflect concern over the "incalculable harm" caused by unwarranted disclosure. See, e.g., Chevron U.S.A. v. United States, Slip Op. 87-13 at 6; Nakajima All Co., Ltd. v. United States, 2 CIT at 173; Connors Steel Company v. United States, 85 Cust.Ct. 112, 113 (1980). In Akzo, supra, the Court of Appeals for the Federal Circuit implicitly condoned such a policy by indicating its approval of the ITC's "conservative position on the side of optimum shielding of business information."⁹ Similarly, in an earlier decision, that court specifically noted the "CIT's well-taken concern for" and "emphasis on protection of confidentiality". U.S. Steel Corporation v. United States, 730 F.2d at 1467, vacating 6 CIT 55, 569 F.Supp. 870 (1983).

At common law, as well as in other statutes and federal rules, there is also an acknowledged concern with protecting confidential commercial information, notwithstanding generally recognized liberal discovery procedures favoring disclosure. See Hickman v. Taylor, 329 U.S. 495, 500-01, 67 S.Ct. 385, 388-89, 91 L.Ed. 451 (1947); United States v. Procter & Gamble, 356 U.S. 677, 682-83, 78 S.Ct. 983, 986-87, 2 L.Ed.2d 1077 (1958). Courts have often ordered disclosed sensitive information pursuant to the common law right of access to judicial records, yet have placed limitations on access to those containing "business information that might harm a litigant's competitive standing". Nixon v. Warner Communications, Inc., 435 U.S. 589, 598, 98 S.Ct. 1306, 1312, 55 L.Ed.2d 570 (1978), citing Schmedding v. May, 85 Mich. 1, 5-6, 48 N.W. 201, 202 (1891), and Flexmir, Inc. v. Herman, 40 A.2d 799, 800 (N.J.Ch.1945). See also Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1179 (6th Cir.1983) ("Under the common law, content-based exceptions to the right of access have been developed to protect competing interests.... These interests include ... trade secrets").

In the discovery context, the "common law tradition" of protecting trade secrets¹⁰ and other confidential commercial information also has been recognized. See Federal Open Market Committee v. Merrill, 443 U.S. 340, 356, 99 S.Ct. 2800, 2810, 61 L.Ed.2d 587 (1978), citing E.I. du Pont de Nemours Powder Co. v. Masland, 244 U.S. 100, 103, 37 S.Ct. 575, 576, 61 L.Ed. 1016 (1917). This qualified privilege developed so as to "encourage...