Smith v. Schlesinger, 74-1440

• Citation: 168 U.S.App.D.C. 204,513 F.2d 462
• Decision Date: 15 May 1975
• Docket Number: No. 74-1440,74-1440
• Parties: Robert P. SMITH v. James R. SCHLESINGER, Secretary of Defense, et al., Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 462

513 F.2d 462

168 U.S.App.D.C. 204

Robert P. SMITH v. James R. SCHLESINGER, Secretary of Defense, et al., Appellants.

No. 74-1440.

United States Court of Appeals District of Columbia Circuit.

Argued October 24, 1974.

Decided May 15, 1975.

Larry L. Gregg, Atty., Dept. of Justice, with whom Henry E. Peterson, Asst. Atty. Gen., Edward S. Christenbury and Benjamin C. Flannagan, Attys., Dept. of Justice, were on the brief for appellants.

William G. Ohlhausen, Washington, D. C., for appellee.

Before BAZELON, Chief Judge, McGOWAN, Circuit Judge, and MERHIGE, ^* District Judge for the Eastern District of Virginia.

Opinion for the Court filed by Chief Judge BAZELON.

BAZELON, Chief Judge.

Robert P. Smith, an aerospace engineer, required a "Secret" security clearance from the Department of Defense to begin his employment at Dunlap & Associates of Santa Monica, California. Smith had held a "Secret" clearance at his two previous places of employment. On April 11, 1966, one week before Smith was to begin his work with Dunlap & Associates, the Industrial Security Clearance Review Office (ISCRO) of the Department of Defense advised Smith that his "Secret" clearance had been immediately suspended because of Smith's failure to meet Criterion R, Part IV of DOD Directive 5220.6. ¹ This Criterion forbids the grant of any security clearance to a person suffering from

(any) illness, including any mental condition, of a nature which, in the opinion of competent medical authority, may cause significant defect in the judgment or reliability of the employee, with due regard to the transient or continuing effect of the illness and the medical findings in such case.

The Statement of Reasons accompanying the ISCRO letter of April 11 identified Smith's illness as a mental condition variously diagnosed as "schizophrenic reaction, unclassified", "paranoid schizophrenic reaction" and "manic depressive reaction, mixed." Of these diagnoses, more will be said below.

Pursuant to procedures established in Part VII of Directive 5220.6, Smith was given an administrative hearing before a Hearing Examiner of the Central Industrial Personnel Access Authorization Board. On June 1, 1967, Hearing Examiner Joseph Sacks determined that Smith's mental condition did not meet the requirements of Criterion R and that Smith was therefore entitled to his "Secret" clearance. ² Previously, on November 16, 1966, Dunlap & Associates began employment of Smith on a special interim basis. The Department of Defense counsel appealed the Examiner's decision to the Appeal Section of the Central Industrial Personnel Access Authorization Board. On November 8, 1967, the Appeal Board reversed the Hearing Examiner and revoked Smith's "Secret" clearance originally granted in 1958. ³ On November 27, 1967, Dunlap & Associates terminated Smith's interim employment. On October 23, 1969, Smith sought reconsideration of this decision by again applying to ISCRO for a "Secret" clearance. On November 2, 1970, Smith was notified that this request was denied. Smith did not attempt to obtain the benefit of the hearing procedures of Directive 5220.6 in regard to this denial of reconsideration. ⁴ Smith alleges that he has been unable to gain employment in his chosen profession, from November 27, 1967, to date, as a result of the denial of a "Secret" security clearance.

On November 17, 1970, Smith filed suit in the federal district court for the District of Columbia charging that the denial of his security clearance in particular and Directive 5220.6 in general were unconstitutional, were not authorized by statute and were otherwise arbitrary and capricious. In the course of pre-trial proceedings, Smith moved for production under Fed.R.Civ.P. 34 of the investigative file compiled by ISCRO staff personnel in formulating the initial decision to deny the security clearance. The Department of Defense objected to this request, arguing that since the court could not review the decision to deny Smith's clearance except on the basis of the administrative record, the investigative file, allegedly not in the administrative record, was legally irrelevant to the court's review task. Smith joined issue on this point. The District Court ordered the Department of Defense to produce the investigative file for in camera inspection. The Department then interposed a claim of Executive Privilege and refused to produce the file. The District Court again ordered the Department to produce file for in camera inspection. The Department again declined to produce the file, sought reconsideration of the second order to produce and moved the District Court to certify the question for interlocutory appeal. ⁵ The District Court denied reconsideration but certified the question to this Court, which on January 26, 1972, denied leave to file the interlocutory appeal. ⁶ Upon Smith's motion, the District Court then imposed sanctions under Fed.R.Civ.P. 37(b)(2) on the Department for its refusal to comply with the discovery order. ⁷ Upon subsequent cross motions for summary judgment, the District Court on May 25, 1972, granted Smith's motion and entered judgment in his favor. ⁸ The Department of Defense appeals from this order. ⁹

The District Court granted Smith's motion for summary judgment upon a finding that Smith's denial of a security clearance was arbitrary and capricious, holding that there was no evidence in the formal record of any relationship between Smith's mental condition and a defect in his judgment or reliability. This finding was based upon Smith's allegations in his Complaint at P 23(f) which, under the Rule 37(b)(2) sanctions imposed upon it, the Department could neither deny nor contradict through introduction of evidence. The imposition of these sanctions, assuming for the moment the validity of order upon which they were based, was a permissible exercise of discretion. ¹⁰ It surely follows from the imposition of the sanctions that Smith is entitled to summary judgment. ¹¹ The Department's main contention on this appeal is that the order requiring in camera inspection is itself invalid and not authorized by Rule 34 which, by reference to Fed.R.Civ.P. 26(b), permits only the discovery of "any matter, not privileged, which is relevant to the subject matter involved in the pending action . . .." The Department contends both that the investigative file is not relevant to Smith's suit and that the file is privileged. Since the discovery order here was only for in camera inspection, the Department further contends that Smith has not shown the degree of necessity it argues is required in order to subject a claim of privilege to in camera scrutiny.

In its initial decision, the District Court failed to state reasons to support its determination that the ISCRO investigative file could be relevant to Smith's suit and of sufficient necessity to order in camera inspection despite the claim of Executive Privilege. Therefore, on January 9, 1975, this Court remanded the record of the case for supplementation as to the District Court's reasons for a finding of relevancy. ¹² The District Court duly has advised us of his reasons and they are as follows: ¹³

a. That the departmental counsel representing the Government at the hearing posed questions to witnesses that had their basis in information to which plaintiff had been denied access.

b. That witnesses at the hearing were allowed access to information in the investigative file to which plaintiff had not been allowed access, and that these witnesses testified to conclusions based on that information.

c. That the investigative file contains prior statements of witnesses who testified at the hearing which related to their testimony and that he was denied access to these statements and therefore he could not effectively cross-examine those witnesses with respect to their testimony.

d. That the investigative file contains material that is favorable to the plaintiff and the non-production of that material prejudiced plaintiff in the presentation of his case, thus violating principles of fundamental fairness and due process.

e. That the administrative proceedings were brought in bad faith and for purposes other than his alleged mental illness.

We affirm. We initially set out in detail the administrative proceedings which led to the denial of Smith's clearance. On the basis of this discussion, we proceed to analyze the District Court's reasons for the determination of relevancy. We conclude these reasons are sufficient to support the order requiring in camera inspection. Our mandate affirming default judgment against the government will issue in the regular course, twenty days from the date of this opinion, unless the government complies with the order requiring in camera inspection.

I. The Administrative Proceedings

The Department's case against Smith consisted entirely of the reports of five doctors and the testimony under oath, subject to cross-examination, of three of those doctors. Of these five doctors, one was a general practitioner not trained in psychiatry and the other four were trained in psychiatry but were not certified by the American Board of Psychiatry and Neurology. Smith presented no expert witnesses on his behalf and conducted his own defense, stating on the record that he could not afford an attorney. ¹⁴

We consider first the reports of the doctors who did not testify. The first is Dr. James S. L. Jacobs. Smith consulted with Dr. Jacobs in 1950 while he was in attendance at the California Institute of Technology. Smith complained of fears of people, headaches, speech difficulty, and inability to awake in the morning. He was hospitalized twice in 1950 under Dr. Jacob's care at Veterans Administration hospitals in the Los Angeles area where he received insulin coma therapy and attendant psychotherapy. Smith testified that the pressure of his graduate work caused these symptoms. ¹⁵ Dr. Jacobs diagnosed Smith as "schizophrenic reaction,...