LaMorte v. Mansfield, 631

Decision Date14 January 1971
Docket NumberNo. 631,Docket 35551.,631
PartiesWillard J. LaMORTE, Petitioner, v. Hon. Walter R. MANSFIELD, Judge of the United States District Court for the Southern District of New York, Respondent.
CourtU.S. Court of Appeals — Second Circuit

Sidney Feldshuh, New York City (Feldshuh & Frank, New York City, of Counsel), for petitioner.

Allan K. Peckel, New York City (Kaufman, Taylor, Kimmel & Miller, New York City, of Counsel), for Zients, and others, plaintiffs in the stockholders' actions.

Alan Palwick, New York City (H. A. & C. E. Heydt, New York City, of Counsel), for Shattuck Denn Mining Corp., defendant in the stockholders' actions.

Before MOORE, FRIENDLY and HAYS, Circuit Judges.

FRIENDLY, Circuit Judge:

Willard J. LaMorte, president and director of the Shattuck Denn Mining Corporation, is a defendant in actions now pending in the District Court for the Southern District of New York, which were brought by Alan Zients and other stockholders for alleged violations of the federal securities laws. In the course of taking LaMorte's deposition prior to trial, plaintiffs' attorneys inquired whether LaMorte possessed a copy of the transcript of testimony he had given in 1967, under subpoena, in a nonpublic investigation being conducted by the Securities and Exchange Commission, pursuant to § 20(a) of the Securities Act of 1933 and § 21(a) of the Securities Exchange Act of 1934, in the Matter of Shattuck Denn Mining Corp. Although LaMorte's counsel in the 1967 investigation had obtained, with the SEC's consent, copies of the transcript, which were in the possession of LaMorte's present counsel at all times here relevant, the latter halted any further inquiry into the matter, saying:

The copy is in the possession of counsel and counsel declines to produce it if that is the thrust of this area for the interrogation on the ground that it is a confidential communication. It is a nonpublic record all in accordance with certain communications that were sent to the court, copies of which were sent to counsel and that is the basis of the refusal.

After further communications between counsel for both parties and the judge as to the proper disposition of plaintiffs' request, Judge Mansfield ordered that defendant LaMorte turn over his copies of the transcript to plaintiffs and any co-defendants who requested them. LaMorte then petitioned this court for a writ of mandamus to require the judge to vacate this order as beyond his power and as an abuse of discretion. We called for an answer, FRAP 21(b), and heard argument. At the conclusion of this we denied the petition but stated that since the issue appears to be a recurring one, see White v. Jaegerman, 51 F.R.D. 161 (S.D.N.Y.1970), we would file an opinion for the benefit of the bar and of other district judges before whom a similar question may arise.

Petitioner relies principally on federal statutes and SEC regulations designed to preserve the secrecy of administrative investigations when this is necessary for proper discharge of the agency's functions. The thrust of his argument is that by availing himself of the opportunity, provided both by statute, 5 U.S.C. § 555(c), and regulation, 17 C.F.R. § 203.6, to obtain under some circumstances a transcript of his testimony before the SEC in a nonpublic investigation, he did not thereby forfeit his alleged privilege to maintain the confidentiality of this testimony.

In order to preserve the confidentiality of information it acquires in certain investigatory proceedings, the SEC promulgated regulations, 2 F.R. 1877 (1937), 2 F.R. 2053 (1937), amended in 1961 to cover specifically such nonpublic records as are here at issue, 26 F.R. 3102:

Information or documents obtained by officers or employees of the Commission in the course of any examination or investigation pursuant to section 17(a) (48 Stat. 897, sec. 4, 49 Stat. 1379; 15 U.S.C. 78q(a)) or 21(a) (48 Stat. 899; 15 U.S.C. 78u(a)) shall, unless made a matter of public record, be deemed confidential. Officers and employees are hereby prohibited from making such confidential information or documents or any other non-public records of the Commission available to anyone other than a member, officer, or employee of the Commission, unless the Commission authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest. Any officer or employee who is served with a subpoena requiring the disclosure of such information or the production of such documents shall appear in court and, unless the authorization described in the preceding sentence shall have been given, shall respectfully decline to disclose the information or produce the documents called for, basing his refusal upon this section. Any officers or employee who is served with such a subpoena shall promptly advise the Commission of the service of such subpoena, the nature of the information or documents sought, and any circumstances which may bear upon the desirability of making available such information or documents.

17 C.F.R. § 240.0-4. See 17 C.F.R. § 230.122 for the virtually identical regulation under the 1933 Act. The SEC's regulations also provided that "information or documents obtained by the Commission in the course of any investigation or examination, unless made a matter of public record, shall be deemed non-public." 17 C.F.R. § 203.2.

The long-standing regulation, set out above, was an articulation of the discretion possessed by the agency in determining whether to disclose information acquired in the course of certain investigatory proceedings. In the interest of confining this discretion, which in some instances might be deemed to operate to the undue detriment of private parties, both Congress, by statute, and the SEC, by regulation, explicitly provided for access to testimony such a party has given in a nonpublic investigation. Section 555(c) of 5 U.S.C., 80 Stat. 385 (1966), which substantially reenacted § 6(b) of the Administrative Procedure Act of 1946, provided, in part, that:

A person compelled to submit data or evidence is entitled to retain or, on payment of lawfully prescribed costs, procure a copy or transcript thereof, except that in a nonpublic investigatory proceeding the witness may for good cause be limited to inspection of the official transcript of his testimony.

Likewise, the SEC has provided in 17 C.F.R. § 203.6 that:

Transcripts, if any, of formal investigative proceedings, shall be recorded solely by the official reporter, or by any other person or means designated by the officer conducting the investigation. A person who has submitted documentary evidence or testimony in a formal investigative proceeding shall be entitled to procure a copy of his documentary evidence or a transcript of his testimony on payment of the appropriate fees: Provided, however, That in a non-public formal investigative proceeding a person seeking a transcript of his testimony shall file a written request stating the reason he desires to procure such transcript,
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    • U.S. Supreme Court
    • February 19, 1974
    ...237, 242, 450 F.2d 698, 703 (1971); Soucie v. David, 145 U.S.App.D.C. 144, 153, 448 F.2d 1067, 1076 (1971); LaMorte v.Mansfield, 438 F.2d 448, 451 (CA2 1971); Bristol—Myers Co. v. FTC, 138 U.S.App.D.C. 22, 25, 424 F.2d 935, 938, cert. denied, 400 U.S. 824, 91 S.Ct. 46, 27 L.Ed.2d 52 18 S.16......
  • Weisberg v. US Department of Justice
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    • U.S. Court of Appeals — District of Columbia Circuit
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    ...at 938-40; M. A. Shapiro & Co. v. Securities & Exchange Comm\'n, 339 F.Supp. 467, 469, 470 (D.D.C.1972); cf. LaMorte v. Mansfield, 438 F.2d 448 (2d Cir. 1971) (Friendly, J.). In Wellford v. Hardin, supra at 25, Judge Butzner commented that 5 U.S.C. § 552(c) provides that the Act "`does not ......
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    • U.S. Court of Appeals — Eighth Circuit
    • February 17, 1971
  • CAB v. Dreyer, 78 C 1475.
    • United States
    • U.S. District Court — Eastern District of New York
    • October 30, 1980
    ...by the courts of similar regulations concerning non-public investigations conducted by other agencies. In LaMorte v. Mansfield, 438 F.2d 448 (2d Cir. 1971), the Second Circuit had the opportunity to interpret 17 C.F.R. § 203.6, an SEC regulation nearly identical to the Part 305 regulation a......
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1 books & journal articles
  • DISCOVERY AS REGULATION.
    • United States
    • Michigan Law Review Vol. 119 No. 1, October 2020
    • October 1, 2020
    ...183; Howard S. Suskin & Joseph H. Thompson, Discovery Stays Under the PSLRA, SEC. LITIG. J., Fall 2007. (364.) LaMorte v. Mansfield, 438 F.2d 448, 451 (2d Cir. 1971); Philip M. Aidikoff, Robert A. Uhl, Ryan K. Bakhtiari & Jeff Aidikoff, Discovery of Regulatory Documents: Debunking t......

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