Powers v. Chicago Transit Authority

• Decision Date: 24 May 1988
• Docket Number: No. 88-1512,88-1512
• Citation: 846 F.2d 1139
• Parties: 46 Fair Empl.Prac.Cas. 1603, 46 Empl. Prac. Dec. P 38,008 John POWERS, Plaintiff-Appellant, v. CHICAGO TRANSIT AUTHORITY, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1139

846 F.2d 1139

46 Fair Empl.Prac.Cas. 1603,

46 Empl. Prac. Dec. P 38,008

John POWERS, Plaintiff-Appellant, v. CHICAGO TRANSIT AUTHORITY, et al., Defendants-Appellees.

No. 88-1512.

United States Court of Appeals, Seventh Circuit.

Submitted April 14, 1988.

Decided May 24, 1988.

John L. Gubbins, Kenneth N. Flaxman, P.C., Chicago, Ill., for plaintiff-appellant.

Barry S. Alberts, Schiff Hardin & Waite, Chicago, Ill., Catherine Masters, Epstein, Alana L. Helverson, Colette Holt, for defendants-appellees.

Before COFFEY, FLAUM, and EASTERBROOK, Circuit Judges.

EASTERBROOK, Circuit Judge.

John Powers, employed by the Chicago Transit Authority as an attorney, believes that the CTA has decided to ease out its white attorneys to make way for minorities. He filed suit under 42 U.S.C. Sec. 1983 contending that he had been harassed, suspended, and demoted on account of his race. Powers sought to discover memoranda written by Joyce Hughes, the General Attorney of the CTA, reflecting a plan of reorganization. The CTA resisted, in part on the ground of attorney-client privilege. While the district court was considering the parties' positions, Powers unveiled a memorandum from Hughes to the Chairman of the Law and Employee Relations committee of the CTA's Board of Directors discussing reorganization of the legal staff. The memo observed, among other things, that the civil service system was an obstacle to reorganization and emphasized the importance of building "a paper record which will substantiate cause for discharge or demotion" of employees.

Powers took this memo as a smoking gun; the defendants treat it as ordinary advice from one bureaucrat to another to follow the traditional C.Y.A. strategy, privileged to boot. The CTA moved for a protective order. Its entitlement depended in part on whether the CTA had treated the document as privileged legal advice. If the CTA disseminated the memo freely, it is unprivileged; if the memo was circulated only to top management (and had been filched by Powers's source or revealed in violation of a duty of confidence), it might be privileged. Powers believes that it is an administrative rather than a legal memorandum, not prepared in connection with litigation. Without deciding whether the memo could be privileged under any circumstances, the district judge ordered Powers to reveal how or from whom he obtained it. Powers responded by saying that he had promised his source confidentiality, and he refused to spill the beans even in camera. He asserted a "confidential-informant-in-litigation" privilege. The district judge informed Powers that there is none; Powers still refused to tell. The district court was not amused and held Powers in contempt, levying a fine of $150 per day starting March 8, 1988, until Powers revealed how he came by the memorandum. The CTA's request for a protective order remains pending; meanwhile Powers has widely distributed the memo, which has received extensive publicity.

Powers filed an appeal and sought a stay of the accrual of fines. He maintains that the court should create a confidential-source privilege; he also contends that the district judge abused his discretion by ordering disclosure without an adequate showing of need for the information. The CTA has moved to dismiss the appeal for want of jurisdiction. We grant this motion and deny Powers's alternative request for mandamus.

We have jurisdiction only if the order amercing Powers $150 per day is a "final decision" under 28 U.S.C. Sec. 1291. A line of cases dating to 1880 has it that an order holding a party in civil contempt is not a "final decision" under Sec. 1291. Fox v. Capital Co., 299 U.S. 105, 57 S.Ct. 57, 81 L.Ed. 67 (1936); Doyle v. London Guarantee & Accident Co., 204 U.S. 599, 27 S.Ct. 313, 51 L.Ed. 641 (1907); In re Christensen Engineering Co., 194 U.S. 458, 24 S.Ct. 729, 48 L.Ed. 1072 (1904) (dictum); Hayes v. Fischer, 102 U.S. (12 Otto) 121, 26 L.Ed. 95 (1880). The adjudication of contempt is no more final than the discovery order it enforces. The party may comply and on appeal from the final judgment assign the need to do so as error; or the party may refuse to comply, let the fine mount up, and on appeal from the final judgment assign the citation as error, recouping or avoiding the sanction. The mounting fines put the party to a hard choice, for if he guesses wrong the sum due at the end of the case may be large, but discovery may be expensive for other reasons too. It is not unusual in commercial litigation for compliance with discovery requests to cost more than a million dollars, yet discovery orders are not on that account reviewable. Many modern commentators believe that the rule postponing review until final judgment is unduly harsh. E.g., Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, 15 Federal Practice and Procedure Sec. 3917 (1976). We said in 1983, however, that the rule is "too well established to be changed by us." In re Witness before the Special October 1981 Grand Jury, 722 F.2d 349, 351 (7th Cir.1983). The intervening five years have made the rule that much better established.

A sanction in criminal contempt is appealable forthwith on the theory that it is the terminating order of a separate proceeding, the criminal prosecution. E.g., Bray v. United States, 423 U.S. 73, 96 S.Ct. 307, 46 L.Ed.2d 215 (1975). That is a venerable rule, dating from Ex parte Kearney, 20 U.S. (7 Wheat.) 38, 5 L.Ed. 391 (1822) (a case that declined to review the criminal contempt, however, because there was then no appellate review in criminal cases). Powers seeks to benefit from that rule by contending that the fine in his case is "quasi-criminal". The "quasi" must signify that Powers knows this sanction to be civil but wishes it were criminal. A sanction designed to induce compliance, which runs prospectively and may be avoided by compliance, is civil. Hicks v. Feiock, --- U.S. ---- - ----, 108 S.Ct. 1423, 1428-31, 99 L.Ed.2d 721 (1988) (collecting cases). Powers may comply and avoid further penalty any time he pleases. The sums due for earlier disobedience cannot be recouped (unless the decision is reversed on appeal), but a day in jail may not be reclaimed either--and confinement until the person complies with an order is the classic civil contempt sanction.

Powers also insists that the adjudication is a "collateral order" immediately appealable under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). An order is collateral and appealable only to the extent it is a "final decision" separate from the merits and unreviewable on appeal. See generally Gulfstream Aerospace Corp. v. Mayacamas Corp., --- U.S. ----, 108 S.Ct. 1133, 1136-38, 99 L.Ed.2d 296 (1988). We agree with Powers to the extent he observes that the label "civil contempt" does not make an order nonappealable if it otherwise satisfies the requirements of appellate jurisdiction. Szabo v. U.S. Marine Corp., 819 F.2d 714, 716-17 (7th Cir.1987); In re Establishment Inspection of Skil Corp., 846 F.2d 1127, (7th Cir. 1988). The point of cases such as Fox and Doyle however, is that the issues involved in an order holding a person in civil contempt for failure to supply information in discovery are reviewable on appeal from the final decision, and hence are not appealable sooner. They hold that the kind of order entered in this case is not appealable under Sec. 1291. We cannot avoid Fox and Doyle by invoking a somewhat different terminology.

Several courts of appeals have taken jurisdiction of appeals by parties when the district court rejected an assertion of privilege. E.g., Southern Methodist University Ass'n v. Wynne & Jaffe, 599 F.2d 707 (5th Cir.1979); Ohio v. Arthur Andersen & Co., 570 F.2d 1370 (10th Cir.1978); Cates v. LTV Aerospace Corp., 480 F.2d 620 (5th Cir.1973). These courts observe that if the party complies with the order and reveals the information, the cat is out of the bag and the privilege is lost. The Second Circuit has adhered to the rule of Fox and Doyle--rightly so, we believe. In re Attorney General, 596 F.2d 58 (2d Cir.1979); IBM Corp. v. United States, 493 F.2d 112, 115 (2d Cir.1973). The essential point of Fox and Doyle is that...