Wirtz v. Continental Finance & Loan Co. of West End

• Decision Date: 10 January 1964
• Docket Number: No. 20611.,20611.
• Citation: 326 F.2d 561
• Parties: W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. CONTINENTAL FINANCE & LOAN CO. OF WEST END, et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

326 F.2d 561 (1964)

W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. CONTINENTAL FINANCE & LOAN CO. OF WEST END, et al., Appellees.

No. 20611.

United States Court of Appeals Fifth Circuit.

January 10, 1964.

Bessie Margolin, Assoc. Solicitor, Jacob I. Karro, Atty., Charles Donahue, Solicitor of Labor, Jack H. Weiner, Atty., Beverley R. Worrell, Regional Atty., Dept. of Labor, Washington, D. C., for appellant.

Nolan B. Harmon, Robert E. Coll, Powell, Goldstein, Frazer & Murphy, Atlanta, Ga., for appellees.

Before TUTTLE, Chief Judge, JONES, Circuit Judge, and JOHNSON, Jr., District Judge.

TUTTLE, Chief Judge.

The Secretary of Labor seeks in this action under the Fair Labor Standards Act, Section 17, 29 U.S.C.A. Supp. IV, § 217, to enjoin alleged violations of the Act. The appellees-defendants, two corporations and the individual corporate officers managing their affairs, are engaged in making small loans and selling life insurance. They are charged with violations of the Act's provisions on overtime, record-keeping, and shipping, but they deny that they are covered by the Act or that any of the violations have occurred.

The ultimate question to be decided in this case is whether the trial court erred in requiring the Secretary to respond to two of defendants interrogatories, which sought the names of all persons who had filed complaints charging violations of the Act and the names of witnesses the Secretary planned to call at the time of the trial. The Secretary refused to answer these interrogatories but he did furnish a list of forty-five persons who "have knowledge or believed by plaintiff to have knowledge of facts relevant to the trial of the issues." The grounds on which the refusal to answer the interrogatories was based were that there was no need for the information requested, that the information was privileged, and the questions went beyond the scope of legitimate inquiry. The trial court concluded, however, that the Government, in exercising its regulatory powers, should stand in no better position in regard to discovery than a private litigant and hence, under the liberal discovery procedure of the rules, the Secretary's interest in maintaining secrecy should be subordinated to defendants' need for a reasonable opportunity to prepare a defense. The Secretary still refused to comply with the order to answer the interrogatories and the action was dismissed.

We do not think that the Government when it institutes an action waives all privileges it may have and submits itself to unlimited discovery. The Government's qualified privilege not to disclose the names of informers is well recognized in criminal cases, e. g., Scher v. United States, 305 U.S. 251, 59 S.Ct. 174, 83 L.Ed. 151 (1938); see, e. g., Bowman Dairy Co. v. United States, 341 U.S. 214, 221, 71 S.Ct. 675, 95 L.Ed. 879 (1957). This privilege may be invoked where a balancing of conflicting policy considerations shows that the public interest in protecting the flow of information outweighs the individual's right to prepare his defense. See Roviaro v. United States, 353 U.S. 53, 77 S.Ct. 623, 1 L.Ed.2d 639 (1957). If this type of weighing of conveniences is warranted in an action where the defendant may be subjected to criminal penalties, it goes without saying that it is appropriate where only civil remedies are sought. Thus, Rule 26(b) of the Federal Rules of Civil Procedure specifically excludes matter which is privileged from the scope of examination on deposition, and this exception is incorporated by reference in Rule 33 governing interrogatories.

In this case the Secretary asserts that there is a vital public interest in preserving the anonymity of employees who complain to the Government that their employer is paying substandard wages. The Government would have a virtually impossible task if it had to rely on its own policing activities to discover all violations of the Wage and Hour Laws; it must therefore depend largely upon the employees themselves, who of course know exactly what they are being paid and what their services are for which they are paid. These employees, however, are particularly susceptible to the fear of retaliation, and to obtain the necessary cooperation, they must be reasonably assured that the names of informers will not be divulged.

However, with respect to this particular interrogatory, we think we need not indulge in weighing the...