Petition — Iowa Beef Processors, Inc. v. Smith
Supreme Court brief1979
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Navote Ceunt, U. Sy
-tL ED’
78-1281 >”
FEB 16 1979
No. MICHARL RopaK jo. crepK |
3n the
Supreme Court of the Anited States
Ocroser Term, 1978
IOWA BEEF PROCESSORS, INC.,
Petitioner,
vs.
NEAL SMITH, Chairman of the Subcommittee on SBA
and SBIC Authority and General Small Business Problems
of the Committee on Small Business, United States House
of Representatives,
Respondent. -
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
Epwarp W. RorHe
James T. MAtysiak
FREEMAN, Rotue, Freeman & SALzMAn
One IBM Plaza - Suite 3200
Chicago, Illinois 60611
(312) 467-5330
Counsel for Petitioner.
TABLE OF CONTENTS
PAGE
SES EEE SS eee 2
AEE oO Oe EN 2
I I ainda cndiiersissninensebsneninnnedatacsabeccocens 2
Constitutional Provisions, Statutes, and Rules In-
TA cil ated incereccnceaintcendctininnebsctaaseebeseenecetane 3
I a. cscamecnessnenere 4
Reasons for Granting the Wit ..............cccssssssesesssessenes 13
A. The Non-Appealability Holding Conflicts With
Rulings by This Court and Two Circuits. ........ 13
B. The Eighth Cireuit Sanctioned Procedures
Which Violate Due Process. ............ccccsseeseessseeee 17
C. The Fifth and Eighth Circuits Conflict on the
Subcommittee’s Need for Congressiona’ Au-
EE 19
SS EEL TL TT OO 20
Appendix A (Eighth Circuit Case) .........cccecssssesesseees A-1
District Court Order, February 13, 1978 Granting
I a sccsccestansedbeccuseisees A-l
District Court Order, November 22, 1978 Modify-
III SII i. sss sccnenccesinbisstncasebecscostetes A-13
Circuit Judge Henley Order, December 4, 1978
Granting Temporary Stay ..........ccccsessesecsseeeseenees A-15
Eighth Cireuit Opinion, December 14, 1978 Deny-
ing Stay and Expediting Appeal ..............:ss0e8 A-17
Eighth Circuit Opinion, February 7, 1979 ............... A-22
li
Appendix B (Fifth Circuit Case) sss B-1
Opinion of District Court (N.D. Tex.), August 17,
1978 Denying Leave to Comply with Sub-
SI TI oc csesehinrceccisnesasentccrcensuninstctiecns B-1
Fifth Cireuit Opinion, February 2, 1979 Dismissing
NE TROON iia cicoccrcigtincatcnniemabansinngons B-7
TABLE OF AUTHORITIES
CASES
ACF Industries, Inc v. Equal Employment Oppor-
tunity Commission No. 78-453, cert. denied,
IE Th, TOSG . cocnssiiciisttiisnitiiiipnninihcnnittinisiatiintintinns 14
Alexander v. United States, 201 U.S. 117 (1906) .. 15
American Tel. & Tel. Co. v. Grady, 7th Cir. No.
78-2316, decided, December 14, 1978, cert. petn.
Ss Wath, TORII: wickenssitickestadentignsscnncctsscdivnisiee 15, 16
Beef Industry Antitrust Litigation, In re, 457
Pee S10 (HD... Dee 1BTB). cececcsecsvssesrsesrcinsne 6
Cobbledick v. United States, 309 U.S. 323 (1940) ..
Cohen v. Beneficial Industrial Loan Corp., 337
Rae Se EEE insesenecintingesbdienssiaisnabadnianaiebsinnidins 2, 13, 15
First Wisconsin Mortgage Trust v. First Wiscon-
sin Corp., 571 F.2d 390 (7th Cir. 1978) ............ 15
Kerr v. United States District Court, 426 U.S.
SP CIE Sines iiaihenenisnbieensienasciictistenginiictinscnesnine 14
Overby v. United States Fidelity and Guaranty
Co., 224 F.2d 158 (5th Cir. 1955) oo... eceeee 15, 16
Perlman v. United States, 247 U.S. 7 (1918) ...... 15, 16
Schlagenhauf v. Holder, 379 U.S, 104 (1964) ........ 13
iii
PAGE
United States v. New York Telephone Co., 434
Se Re CUPEED. :caicerntansincesuisineuenvinennmenaantities 13, 18
United States v. Ryan, 402 U.S. 530 (1971) ...... 14,15
Watkins v. United States, 354 U.S. 178 (1957) .. 16
ConsTITUTIONAL Provisions, Statutes & Ruies
United States Constitution, 5th Amendment ........ 3, 7
| TE hic aicnnescieescintaeyeiatinlenencinsionadbpenanebins 16
SE IE INTENT TT sscicascnsneccrsnsnsisietbaniaiiadieasenntenllitcventent 2
Se Ns EE icibtnttesiipcinrnnnonepnpninienidcnnennationiienl 2, 3,11
Bee IRIE ahivciecseicsimnticionionsispvewbidveinsuinieh = 3, 10
Supreme Court Rule 19(b) ......ccccccccssssssessereeseeeseeee 20
Federal Rules of Civil Procedure:
SN Te alec nec clin center ne 18
SOTTO si:0s ssi stsheepinipsiapebetininaipucimbaidaainnnelie 2, 3,5
HID. sa caGiala scien ned ipnlis eal hareninediaaenpiaapieitaatceanoieis 5
NIE cescadeisdnihantecidesiepuemmannbiatiniiaianniteatoahie 2, 4, 11
RIED Css ci cctiala aes scnlacieiintablenninn 2, 4, 10, 11, 12,17
UIT sccciuuainisssopicbhaeicniuitiiitbesinesteaanisiasinginnliandeabiae 4
IN THE
SUPREME COURT OF THE UNITED STATES
Octoser Term, 1978
No.
IOWA BEEF PROCESSORS, INC.,
Petitioner,
vs.
NEAL SMITH, Chairman of the Subcommittee on SBA
and SBIC Authority and General Small Business Problems
of the Committee on Small Business, United States House
of Representatives,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
Iowa Beef Processors, Inc. (“IBP”) prays that a writ
of certiorari issue to review the judgment and opinion
of the United States Court of Appeals for the Eighth
Circuit, holding that although the District Court for the
Northern District of Iowa committed a clear abuse of
discretion by modifying its protective order to permit a
congressional subcommittee to subpoena privileged IBP
documents in the hands of its litigation adversary, the
Court was nevertheless powerless to grant relief because
the documents had been seized before IBP’s counsel were
informed of the modification and could appeal.
a ae
OPINIONS BELOW
The opinions of the Court of Appeals for the Eighth
Cireuit (App. A-22-32) and the United States District
Court for the Northern District of Iowa (App. A-13-14)
are unreported.
JURISDICTION
The jadgment of the Court of Appeals for the Kighth
Circuit was entered on February 7, 1979. This Court has
certiorari jurisdiction under 28 U.S.C. §1254(1).
QUESTIONS PRESENTED
1. Whether a Disirict Court order modifying a pro-
tective order under Federal Civil Rule 26(c)({7) to permit
the custodian of privileged documents produced during
discovery to comply with a congressional subecommittee’s
subpoena is a final decision from which an appeal lies
under 28 U.S.C. $1291 and the “Collateral Order” doctrine
of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541
(1949), so that—
(a) The modification order is immediately appealable by
the party whose documents and privilege are at
stake, but who otherwise would have no opportunity
for appellate review of its claims; and
(b) The modification order is a “judgment” within the
meaning of Federal Civil Rule 54(a), and the auto-
matic stay provision in Rule 62(a) applies to pre-
clude enforcement of the modification order and the
Subcommittee’s subpoena for 10 days.
2. Whether the Circuit Court, having granted man-
damus review of the merits and found clear error in the
modification of the protective order, should have ordered
the Subcommittee to return the privileged documents and
a he
protected their contents against disclosure, using either
its contempt power to remedy a violation of the protective
order or its residual power under the All Writs Statute
(28 U.S.C. §1651(a)) to preserve the integrity of its
appellate jurisdiction and IBP’s right to effective appellate
review of the modification order.
3. Whether a congressional subcommittee may sub-
poena privileged documents in the custody of a party to
federal court litigation which are subject to a protective
order without obtaining Congressional approval and filing
a formal intervention so that the terms and conditions
of its access to the documents may be controlled by the
Court.
CONSTITUTIONAL PROVISIONS, STATUTES,
AND RULES INVOLVED
Fifth Amendment, United States Constitution:
No person shall * * * be deprived of life, liberty, or
property, without due process of law * * *.
28 U.S.C. $1291:
The courts of appeals shall have jurisdictiou of appeals
from all final decisions of the district courts of the
United States * * *.
28 U.S.C. §1651(a):
e Supreme Court and all courts established by
Act of Congress may issue all -writs necessary or
appropriate in aid of their respective jurisdictions
and agreeable to the usages and principles of law.
Rule 26(c)(7), F.R.Civ.Proc. :
Upon motion by a party * * * and for good cause
shown, the court in which the action is pending ° ° *
an
may make any order which justice requires to protect
a party or person from annoyance, embarrassment,
oppression, or undue burden or expense, including one
or more of the following: * * * (7) that a trade
secret or other confidential research, development, or
commercial information not be disclosed or be dis-
closed only in a designated way * * *.
Rule 54(a), F.R.Civ.Proce.:
“Judgment” as used in these rules includes a decree
and any order from which an appeal lies * * *.
Rule 62(a),(g), F.R.Civ.Proc.:
(a) Automatic Stay; Exceptions—Injunctions, Receiver-
ships, and Patent Accountings. Except as stated
herein, no execution shall issue upon a judgment
nor shall proceedings be taken for its enforcement
until the expiration of 10 days after its entry. * * *
* * *
(g) Power of Appellate Court Not Limited. The pro-
visions in this rule do not limit any power of an
appellate court or of a judge or justice thereof to
stay proceedings during the pendency of an appeal
or to suspend, modify, restore, or grant an injunc-
tion during the pendency of an appeal or to make
any order appropriate to preserve the status quo
or the effectiveness of the judgment subsequently to
be entered.
STATEMENT OF THE CASE
The undisputed facts reveal persistent efforts by a con-
gressional subcommittee to obtain confidential business
documents covered by two courts’ protective orders, with
out complying with established congressional and judi-
cial procedures.
In 1977, IBP filed the diversity action out of which this
controversy springs against a former executive, Hughes
cca en
A. Bagley, for breach of corporate fiduciary duty and
breach of his termination contract covenant not to assist
third parties in litigation against IBP, alleging that Bagley
had disclosed confidential IBP documents and information
to officials of the Amalgamated Meat Cutters and Butcher
Workmen of America, AFL-CIO, and three lawyers, all
of whom were also charged with aiding, abetting, and
exploiting Bagley’s breaches and conspiring to defame
IBP. Iowa Beef Processors, Inc. v. Gorman, et al. (N.D.
Ia., No. C 77-4040).
Two of the lawyers named as defendants in Gorman,
Lex Hawkins and John Cochrane, represent Meat Price
Investigators Association (““MPIA”), a group of cattlemen
suing meat packers (including IBP) and supermarkets
for conspiring to depress the price of cattle in multi-
district litigation (M.D.L. 248) pending before Judge
William M. Taylor, Jr. in Dallas.
IBP initiated discovery in Gorman by filing a Rule 34
document request asking Bagley to produce for inspection
and copying all IBP documents in his possession. In re-
sponse, Bagley produced 7 packing boxes of documents
which he had taken with him when he left IBP in July,
1975.
On October 26, 1977, IBP moved under Federal
Civil Rule 26(c)(7) for a protective order preserving the
confidentiality of IBP business information contained in the
documents Bagley had produced and in his deposition,
which had also been taken, “by restricting their use to
defense counsel for the purposes of this case or to Hawkins’
and Cochrane’s use for the purposes of their antitrust
case (M.D.L. 248) subject to the protective order in that
case.”
ad Abide
IBP’s motion for protective order was resisted and
briefed, but on February 13, 1978 Chief Judge McManus
entered an order “limiting the usage of IBP’s confidential
business information * * *” as IBP had requested. (App.
A-9)
On February 23, 1978, Representative Neal Smith of Iowa,
as Chairman of the Committee on Small Business and its
Subcommittee on SBA and SBIC Authority and General
Small Business Problems, issued a subpoena duces tecum
to MPIA’s attorney, Hawkins, to produce “all documents
given to you * * * by Hughes Bagley and any and all
documents exhibits depositions or related materials taken
in the case of Iowa Beef Processors, Inc. v. Gorman, et al.
Civil #(C77-4040.” Although the documents sought had
been produced and were covered by the protective order
in the Gorman case, Hawkins applied not to Chief Judge
McManus in Sioux City, but to District Judge Taylor in
Dallas for permission to comply with the congressional
subpoena.
On March 22, 1978 Judge Taylor refused to modify his
protective order to permit Hawkins to comply with the
Subcommittee’s subpoena, holding that Congress had no
right to “run roughshod” over a protective order just
because it wanted to “get all of the information that some
of the lawyers have”:
I think the orders of a Federal Court in its under-
taking to dispose of cases, of lawsuits, have some
significance and some importance.
In re Beef Industry Antitrust Litigation, 457 F.Supp. 210,
213 (N.D. Tex. 1978) (App. B-5).
The Subcommittee then, without formally intervening
in the Beef Industry Antitrust Litigation, filed a motion
a
before Judge Taylor to grant Hawkins leave to comply
with its subpoena or, in the alternative, for clarification
or modification of his protective order. On August 17,
1978, Judge Taylor denied the Subcommittee’s motion,
holding that since Hawkins would not have had possession
of the Bagley documents but for federal court discovery
rules, the Subcommittee was violating the Due Process
Clause of the Fifth Amendment by “interfering with the
processes of a Federal Court in an individual case.” Jd.,
at 213. (App. B-3)
Judge Taylor’s ruling was appealed by the Subcommittee
to the Fifth Cireuit, which dismissed for lack of jurisdic-
tion on February 2, 1979, holding that Congressman Smith
and his Subcommittee had failed to follow the rules of
the House of Representatives and should have obtained a
resolution from the full House authorizing the filing of
the motion to modify the protective order in Judge Taylor’s
court and to appeal Judge Taylor’s adverse ruling. (App.
B-7-15)
Meanwhile, on July 20, 1978, IBF had offered to co-
operate with the Subcommittee’s investigation and pro-
du~2 the documents sought, subject to appropriate safe-
guards as to confidentiality, even though IBP had never
been informed of the reason for the Subcommittee’s in-
terest in the documents or the nature of its investigation.
This offer was flatly refused by the Subcommittee. In-
stead the Subcommittee’s Special Counsel stated that he
intended to have his investigators interview Bagley dur-
ing the week of September 25, 1978, and they would be
instructed to inspect and copy documents which they con-
sidered relevant to the investigation. The Subcommittee
refused to keep confidential any documents which it might
obtain or seek court permission for disclosure.
mins
Because of the Subcommittee’s threat to review and
copy the Bagley documents, despite Chief Judge McManus’
protective order, IBP on October 11, 1978 filed a motion in
the Sioux City case for an order authorizing the filing
of the Bagley documents with the Clerk of the Court, “to
be maintained thereafter under the control of the Court.”
Bagley did not oppose that motion. IBP’s motion, if
granted, would have required the Subcommittee to appear
before Chief Judge McManus and grapple with the separa-
tion-of-powers question raised by the Subcommittee’s sub-
poena rather than using a litigant (Bagley) as its proxy.
On October 30, 1978, while IBP’s motion to impound
the Bagley documents was pending, the Subcommittee
issued a subpoena to Bagley, calling, in haec verba, for»
the production on November 7, 1978 of the same docn-
ments IBP had specified in its 1977 request for production
of documents by Bagley in Gorman. On November 3, 1978
Bagley (caught between the court protective order and the
Subcommittee subpoena) filed in the Sioux City case a mo-
tion to lift Chief Judge McManus’ protective order so he
could comply with the subpoena or, in the alternative, for
guidelines as to how he should respond. IBP opposed
Bagley’s motion and urged that Bagley’s predicament be
resolved by granting IBP’s motion to impound the docu-
ments so that the terms and conditions under which the
documents might be released would be subject to court
control. The Subcommittee informally agreed to post-
pone the return date of the subpoena until Chief Judge
McManus ruled on the pending IBP and Bagley motions.
On Friday November 24, 1978 Chief Judge McManus
filed an order denying IBP’s motion to impound the docu-
ments and granting Bagley’s motion to modify the pro-
tective order, stating (App. A-14):
The Court can ascertain no great interference with
its ability to proceed in this suit if the committee
is allowed access to the records and the right to
copy them as long as the originals still remain ac-
cessible to the parties to prosecute this action. IBP
is free to approach the committee as to the scope of
the use of the documents.
The Subcommittee learned of the entry of this order,
and on Monday, November 27, the Subcommittee’s in-
vestigator appeared at the offices of Bagley’s counsel in
Sioux City and took possession of Bagley’s 7 boxes of IBP
documents.
IBP’s counsel, however, was not informed of Chief
Judge McManus’ modification order until Tuesday, Novem-
ber 28, when a copy of that order was received in the
mail. Upon learning that the Subcommittee already had
the documents, and at the request of Chief Judge Me-
Manus’ Magistrate, IBP’s counsel called the Subcom-
mittee’s Special Counsel to see if he would agree to im-
pound the documents pending IBP’s appeal from Chief
Judge McManus’ modification order. The Special Counse]
refused, saying that now that the Subcommittee had pos-
session of the documents, IBP was playing in a “different
ballpark” where the courts had no power and that the
Subcommittee had unfettered discretion to make public
disclosure of the documents.
On November 29, 1978 IBP filed a Notice of Appeal to
the Eighth Circuit and applied to the District Court for
a stay of its modification order pending appeal, but the
District Court took no action.
a= $0...
Or December 4, 1978, the day on which the automatic
10-day stay on the enforceability of judgments was due
to expire (Federal Civil Rule 62(a)), IBP applied to
Eighth Circuit Judge Henley for a stay of Chief Judge
McManus’ modification order pending appeal and, under
the All Writs Statute (28 U.S.C. §1651(a)), for an order
“preserving appellate jurisdiction” by requiring the Sub-
committee to return and not disclose the contents of the
documents pending appeal. The Subcommittee’s Special
Counsel ‘‘specially appeared’™ before Circuit Judge
Henley in Little Rock and agreed to a temporary stay and
non-disclosure of the documents until December 16 to
permit the Eighth Circuit to consider IBP’s motions in an
orderly fashion. (App. A-15-16)
Pursuant to Judge Henley’s request, both IBP and the
Subcommittee submitted samples of the documents for
the Court’s im camera inspection. The samples plainly
demonstrated that the documents contained attorney-client
privileged materials and confidential IBP commercial data.
On December 14, after argument on December 12, an
Eighth Circuit panel denied IBP’s motion for a stay of
Chief Judge McManus’ modification order pending appea!
and for an extraordinary writ to preserve appellate juris-
diction as being “inappropriate and unnecessary at this
time” because the court accepted the “good faith” repre-
sentations by the Subcommittee that it “has no intention
of making public any of these documents” until after the
* Bagley, the formal appellee, informed the Court of
Appeals that he would comply with the Court’s resolu-
tion of the dispute and would not participate in the
appeal unless the Court requested. Thus, the only party
opposing IBP’s appeal was the Subcommittee, which was
not technically a party to the case,
—li—
House of Representatives reconvened in January, 1979
and that, meanwhile, the Subcommittee would take “all
appropriate precautions’’ to insure that there would be no
disclosure except to permit its staff to begin the job of
collating and classifying. However, recognizing that the
case “presents serious jurisdictional and substartive ques-
tions and implicates fundamentai concepts of legislative
and judicial authority”, the Panel expedited hearing on
the merits of IBP’s appeal and scheduled oral argument
for January 9, 1979. (App. A-17-21)
On February 7, 1979, the Eighth Circuit held that Chief
Judge McManus’ modification order was not appealable
of right as a final order under 28 U.S.C. $1291, but that
the Court nevertheless could reach the merits -hrough
use of mandamus. The Court then granted a writ of man-
damus, vacated Chief Judge McManus’ modification order,
and remanded with directions to reinstate, in full, the
protective order, holding that the District Court had
committed a “clear abuse of discretion” by allowing “dis-
closure of these documents to the Subcommittee without
any constraints on the Subcommittee’s use thereof.” Never-
theless, the Eighth Circuit refused to grant IBP’s request
for a writ compelling the Subcommittee to return the
documents and maintain their confidentiality because its
holding that Chief Judge McManus’ modification order was
not a final, appealable order under 28 U.S.C. $1291 also
meant that the automatic 10-day stay provision of Federal
Rule 62(a) did not apply.?, Hence, the Court reasoned, al-
though the modification order itself-was a clear abuse
of discretion, reviewable by mandamus, it was neverthe-
* Rule 62(a)’s automatic stay applies to ‘‘judgments,’’ a
term defined by Rule 54(a), F.R.Civ.Proc., as including
orders ‘‘from which an appeal lies.’’
= oo
less in effect when the Subcommittee seized the documents
on November 27 and no “existing court order” was
violated by the seizure. (App. A-22-32) The Kighth Cir-
cuit, however, did not discuss IBP’s contention that under
the All Writs Statute, it had power to grant relief to IBP
regardless of whether the protective order modification
was stayed for 10 days under Federal Civil Rule 62(a).
This petition for certiorari to review the Eighth Cir-
cuit’s failure to grant relief against the Subcommittee’s
seizure of the documents is coupled with a separate motion
for a preliminary injunction requiring the return of the
documents and preserving their confidentiality pending
this Court’s disposition of the certiorari petition and, if
granted, the merits.
a
REASONS FOR GRANTING THE WRIT :
The Eighth Cireuit concluded that IBP had suffered a
clear wrong but had no remedy even though the Subcom-
mittee’s precipitous seizure of the documents frustrated
IBP’s right to effective appellate review of the modifica-
tion order. To reach this result, the Eighth Circuit had
to adopt a patently erroneous construction of the finality
rule of Cohen v. Beneficial Industrial Loan Corp., 337
U.S. 541 (1949) which conflicts with decisions of this
Court and of the Fifth and Seventh Circuits. If the
District Court’s error was appealable as of right, then
the Subcommittee seized the documents in violation of
the protective order because the automatic 10-day stay
was in effect, and no court could tolerate such a flouting
of its orders, even by a congressional subcommittee.
In addition, the Eighth Circuit refused to discuss IBP’s
contention, based upon a recent decision of this Court,
that even in the absence of a violation of a court order
the federal courts are authorized by the All Writs Statute
to issue a writ to a non-party who threatens to ‘‘frus-
trate the implementation of a court order or the proper
administration of justice * * *.” United States v. New
York Telephone Co., 434 U.S. 159, 174 (1977).
A. The Non-Appealability Holding
Conflicts With Rulings by This
Court and Two Circuits.
The Eighth Circuit’s use of mandamus, rather than ap-
peal, to review Chief Judge McManus’ modification order
was a questionable use of the writ to avoid the conse-
quences of a holding that the Subcommittee’s seizure
had violated the protective order.
Mandamus should not be used as a substitute for ap-
peal, Schlagenhauf v. Holder, 379 U.S. 104, 112, n.8 (1964),
and should be granted only where a party has “no other
a.)
adequate means to attain the relief he desires’, Kerr v.
United States District Court, 426 U.S. 094, 403 (1976).
Here, perversely, the Eighth Circuit used mandamus to
deny IBP relief for the substantive rights it found to
have been violated. Three Justices of this Court recently
criticized the Eighth Circuit’s indiscriminate use of “the
mandamus power to mask a questionable jurisdictional
decision.” ACF Industries, Inc. v. Equal Employment
Opportunity Commission, No. 78-453 (Jan. 8, 1979; opin-
ion of Mr. Justice Powell, joined by Mr. Justice Stewart
and Mr. Justice Rehnquist, dissenting from denial of writ
of certiorari).
The Eighth Cireuit’s holding that the modification order
was not a final, appealable order conflicts with decisions
of this Court and closely parallel decisions of the Fifth
and Seventh Circuits that even a discovery order is ap-
pealable “where denial of immediate review would render
impossible any review whatsoever of an individual’s claims
°° *” United States v. Ryan, 402 U.S. 530, 533 (1971).
The rationale for the line of cases relied on by the Eighth
Circuit (see App. A-25), which deny immediate review
of orders compelling testimony or production of docu-
ments, is that the witness has a choice: He may either
comply or refuse and, if found in contempt, appeal the
contempt order. Cobbledick v. United States, 309 U.S. 323,
328 (1940); United States v. Ryan, supra, at 532-533. But
where a party asserting a privilege claim with respect
to subpoenaed documents is not the custodian of the docu-
ments to whom the subpoena is directed and therefore
cannot assert his claim by refusing to comply and obtain-
ing appellate review of any contempt ruling, an order
compelling compliance with the subpoena is final and ap-
pealable as of right; for otherwise there is no interested
party to assert the privilege and its breach would be be-
=
yond effective appellate review. Perlman v. United States,
247 U.S. 7, 12-13 (1918); Overby v. United States Fidelity
and Guaranty Co., 224 F.2d 158, 162 (5th Cir, 1955);
American Tel. & Tel. Co. v. Grady, 7th Cir. No. 78-2316,
decided, December 14, 1978, petn. for cert. pending, No.
78-1063.°
This case falls squarely within the Cobbledick-Ryan
rationale and the Perlman-Overby-ATT implementation
of that rationale, and yet the Eighth Circuit refused even
to discuss this line of cases. The Subcommittee’s back-
door strategy, indiscriminately subpoenaing all of Bag-
ley’s IBP documents from IBP’s litigation adversaries
: * The Seventh Circuit’s recent holding was stated as fol-
Ows:
“The Cohen rule was explicitly not made applicable
_.to orders respecting discovery in Alexander v. United
States, 201 U.S. 117, 121 (1906) on the ground that a
witness must first refuse to produce or to testify, and
must be punished for criminal contempt, before a
right to review arises. .
“The discovery order presently under review modi-
fies an existing protective order in order to permit a
non-party access to discovered materials. Because the
discovery order directs MCI to turn over the dis-
covered materials to the government, ATT does not
have the option sanctioned in Alexander in order to
challenge and stop the transfer of custody of the
materials. For these reasons, this court finds Alex-
ander to be inapposite, applies the “collateral order”
doctrine of Cohen, and holds that the particular
species of discovery order under review is final and
appealable. First Wisconsin 4 > Trust v. Furst
Wisconsin Corp., 571 F.2d 390, 393 (7th Cir. 1978)
(adopted en banc). For the same reasons, the condi-
tional petition for writ of mandamus filed by ATT is
denied.” [Footnote omitted.] [Cert. Petn. in No. 78-
1063, App. A, 4a-5a.]
—16—
(first Hawkins, unsuccessfully, and then Bagley), was ob-
viously designed precisely to avoid giving IBP a chance
to assert its claim in the normal manner.‘
As in Perlman, Overby and ATT, Bagley clearly had
no interest in asserting IBP’s claims with respect to the
documents; and the modification order, if not appealable,
would result in the loss of IBP’s rights forever because
of the Subcommittee’s avowed intent to use and disclose
the documents without constraint. A more justifiable case
for immediate appeal cannot be imagined. The modifi-
cation order allowing Bagley to comply with the Sub-
committee’s subpoena was clearly separable from and
collateral to IBP’s breach-of-duty and conspiracy-to-de-
fame suit; and the Eighth Circuit, in allowing mandamus,
necessarily agreed that serious and unsettled questions
requiring immediate appellate review were presented.
In this context, there was no need to strain the limits of
mandamus as an appellate vehicle, and “collateral order”
appeal was the appropriate method.
‘If the documents had been subpoenaed directly from
IBP, IBP could have demanded a definition of the sub-
ject matter and scope of the Subcommittee’s investiga-
tion, objected to producing documents not pertinent to
the investigation or otherwise privileged, well oy refused to
comply if the Subcommittee declined to recognize IBP’s
objections. The Subcommittee then would have had to
obtain a resolution from the full House to request the
Department of Justice to prosecute IBP for contempt of
Congress under 2 U.S.C. §192, IBP’s pertinenecy and
Finan objections could have been litigated before a
ederal district court in the contempt-of-Congress trial,
. and any conviction for contempt could have been ap-
org as a final judgment. Watkins v. United States,
54 U.S. 178 (1957).
a
—_ So
B. The Eighth Circuit Sanctioned
Procedures Which Violate Due Process.
Even more serious than the Eighth Cireuit’s question-
able use of mandamus as a substitute for appeal is the
way that jurisdictional concept was used to avoid the
difficult substantive question of appropriate relief for
IBP. Having agreed with two district judges that the
IBP documents were entitled to judicial protection, the
Eighth Circuit nevertheless effectively denied that pro-
tection by holding that since the Subcommittee was not a
formal party and had not violated the 10-day stay pro-
vision in Rule 62(a), there was no basis for relief. The
Court of Appeal’s admittedly ad hoc jurisdictional deei-
sion sanctioned a serious departure from due process
and decided important questions concerning separation
of powers and the integrity of judicial protective orders
which should be reviewed by this Court.
If Chief Judge McManus’ modification order was final
and immediately appealable as a “collateral order”, it
is clear that the Subcommittee’s seizure of the documents
during the 10-day automatic stay period violated a federal
court protective order. The consequences, involving the
delicate separation-of-powers question of the power and
means of enforcing a protective order against a congres-
sional subcommittee which is not technically a party to
the case, are of obvious importance to the integrity of the
judicial process.
But even if the modification order was not a final, ap-
pealable order and there was no technical violation of an
existing protective order, the Eighth Circuit’s ruling that
it was powerless to grant any relief to protect the privi-
lege which would otherwise be destroyed is tantamount
to ruling that the All Writs Statute is not sufficient-
ly broad to give the courts power to protect the integrity
a, ee
of their procedures. Judge Taylor in Dallas did not hesi-
tate to rule that Congress was not entitled to interfere
with the litigation process and the Fifth Circuit recog-
nized that “[i]f Congress as a whole has created a privi-
lege, then it is the duty of the court tc protect it against
violation even by a committee of that Congress” (App.
B-8); but the Eighth Cireuit instead deferred on a
technicality which rewards the Subcommittee’s devious
tactics and ignores this Court’s admonition that the power
conferred by the All Writs Statute extends “to persons
who though not parties to the original action or engaged
in wrongdoing are in a position to frustrate the imple-
mentation of a court order or the proper administration
of justice * * *.” United States v. New York Telephone Co.,
supra, 434 U.S. at 174.
Whether or not the seizure violated an existing order,
the question whether congressional subcommittees are
entitled to monitor and scavenge litigation discovery with-
out respecting judicial protective orders and the privi-
leges they insure is an important constitutional issue
which has not been—but should be—settled by this Court.
If congressional committees are allowed to subpoena docu-
ments covered by a judicial protective order from liti-
gants, without filing a formal intervention under Federal
Civil Rule 24 and subjecting themselves to judicial
control over the circumstances under which access can
be obtained, the liberal discovery rules will be endangered
and congressional subpoena procedures subverted. Due
process demands no less than that IBP be afforded a
procedure, somewhere, to assert its privilege claims, but
the Eighth Circuit’s decision frustrates that right. In-
deed, as the Eighth Circuit itself recognized (App. A-29),
the breach of the protective order permitted below
©
a
threatens to moot IBP’s prayer for injunctive relief in
the Gorman case preventing further disclosure and com-
pelling return of the documents to IBP.
C. The Fifth and Eighth Circuits
Conflict on the Subcommittee’s
Need for Congressional Authorization.
The Fifth Circuit and Eighth Circuit are also seriously
at odds on the Subcommittee’s need for full House au-
thorization before undertaking court proceedings to enforce
or effectuate its subpoenas. The Fifth Circuit required
the Subcommittee to show that it was speaking for Con-
gress before requiring sensitive constitutional issues to be
decided by the federal courts. The Eighth Circuit, in con-
trast, allowed the Subcommittee to enforce its subpoena
without intervening by using its subpoena leverage to
force Bagley to ask for modification of the protective
order. Since it had the documents, the Subcommittee
deigned to make a so-called “special appearance” in the
Kighth Circuit, although there is no provision for such
a maneuver in any federal rule, and argued against IBP’s
contentions, but persisted in denying that it had to respect
any court order. The Eighth Circuit allowed it to do so in
the name of Congress without any proof that the Sub-
committee Chairman was speaking for anyone except him-
self,
This Court must review the Eighth Circuit’s tolerance
of the manipulation of civil litigants and Court procedures
by a congressional subcommittee which has not demon-
strated that the full House has authorized and endorsed
the questionable conduct of the Subcommittee undertaken
to enforce its subpoena.
ee
CONCLUSION
The procedures used by congressional subcommittees
seeking protected materials produced in the course of
litigation raise important issues concerning the congres-
sional subpoena process, separation-of-powers, and the
power of the courts to protect litigants from the con-
sequences of liberal discovery. The Eighth Circuit tried to
avoid these difficult issues by procedural legerdemain which
conflicts with the holdings of this Court and the Fifth
and Seventh Circuits on the scope of the “collateral order”
doctrine of appealability; and its denial of relief emascu-
lates the power of the courts under the All Writs Statute
to preserve the integrity of the discovery rules against
interference by non-parties. Finally, the Eighth Circuit
sanctions a procedure which not only conflicts with the dis-
covery rules, but permits a congressional subcommittee to
obtain admittedly privileged materials without affording
the party most interested an opportunity to challenge the
subpoena and raise the privilege issue.
Since each of the criteria specified by this Court’s Rule
19(b) is fulfilled in this case, a writ of certiorari should
be granted to review the decision of the Court of Appeals
for the Kighth Circuit that, although it was clear error
to modify the protective order, the courts are powerless
to rectify the resulting breach of privilege.
Respectfully submitted,
Epwarp W. Rorue
JAMES T. MaAtystaK
FREEMAN, Rotue, Freeman & SauzMAN
One IBM Plaza—Suite 3200
Chicago, IL 60611
(312) 467-5330
xt poe
APPENDIX A
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
IOWA BEEF PROCESSORS, INC.,
Plaintiff,
vs.
PATRICK E. GORMAN, HARRY R. POOLE, and SAM
TALARICO, as representatives of the members of
AMALGAMATED MEAT CUTTERS AND BUTCHER
WORKMEN OF NORTH AMERICA, AFL-CIO; IRV-
ING STERN; ALBERT J. KRIEGER; LEX HAWKINS;
JOHN A. COCHRANE; HUGHES A. BAGLEY; and
HANS AARSEN,
Defendants.
No. C 77-4040
ORDER
(Filed Feb 13 1978)
The matter before the court is the latest imbroglio of
the parties.’ Pending motions are:
(1) Defendant John A. Cochrane’s resisted motions to
dismiss and for a protective order, both filed July 22, 1977.
Denied.
*The court has examined the transcript of the hearing
before the Judicial Panel on Multidistrict Litigation (Sep-
tember 30, 1977) wherein Judge Weinfeld described this
litigation as ‘‘a donnybrook . .. [and] a case of crimina-
tion and recrimination charges and counter-charges, and
carrying with it the usual bitterness . . . [where] almost
every question that is put to a witness would draw an
objection’’. The record to date appears to support this
assessment,
= oe
(2) Defendant Lex Hawkins’ resisted motions to dis-
miss and for a protective order, both filed July 22, 1977.
Denied.
(3) Defendant Albert J. Krieger’s resisted motion to
dismiss filed August 15, 1977. Denied.
(4) Plaintiff’s resisted motion to enjoin a separate
action filed in the United States Court for the Southern
District of Iowa filed August 15, 1977. Denied.
(5) Defendants Hawkins and Cochrane’s resisted mo-
tions to dismiss and for a protective order, both filed
August 30, 1977. Denied.
(6) Defendants Amalgamated Meat Cutters and Butch-
er Workmen of North America, AFL-CIO (Union), Pat-
rick E. Gorman, Harry R. Poole, and Sam Talarico’s
resisted motion to dismiss filed September 6, 1977. Denied.
(7) Plaintiff’s resisted motion to compel production of
documents filed September 8, 1977. Granted.
(8) Defendant Irving Stern’s resisted motion to dis-
miss filed September 26, 1977. Denied.
(9 Plaintiff’s resisted motions for summary judgment,
for a protective order and to compel discovery, all filed
October 28, 1977. Granted and denied in part.
(10) Defendants Hawkins and Cochrane’s resisted mo-
tion to compel answers to deposition questions filed De-
cember 13, 1977. Granted and denied in part.
In this diversity action plaintiff seeks damages and in-
junctive relief against defendants for their role in the
alleged malicious inducement to breach and breach of a
settlement agreement between plaintiff and defendant
Hughes A. Bagley [Bagley], plaintiff’s former Vice-
President.? Plaintiff claims that Bagley met with the de-
* The settlement agreement, summarized, compromised
Bagley’s compensation claims under his employment con-
tract and released IBP from latent suits by Bagley in re-
turn for a release of Bagley from a covenant not to com-
pete contained in his employment contract and a release
of any cause of action IBP may have had to the time of
the settlement agreement.
a
fendants several times and provided copies of plaintiff’s
documents, secured with the help of defendant Aarsen, to
the defendant attorneys for the purpose of aiding anti-
trust litigation pending against plaintiff in Texas, (M.D.L.
No. 248). Plaintiff alleges that the conduct by Bagley vio-
lates both the terms of his settlement agreement and his
fiduciary duty to the company and that it was knowingly
and maliciously induced by various defendants who con-
spired to use the inside information to cause damage to
IBP’s business.
Motion to Dismiss for Lack of
Subject Matter Jurisdiction
Plaintiff originally brought this suit against inter alia
the Union as an entity. Defendants Hawkins and Cochrane
originally sought to dismiss for lack of diversity averring
that the Union had many members of Nebraska citizen-
ship, the citizenship of plaintiff. Plaintiff then amended its
complaint to drop Amalgamated and add its three top offi-
* (Continued)
Paragraph 3.2 of the covenant bound Bagley to refrain
from assisting third-party litigation against IBP, stating:
3.2. BAGLEY, for himself and heirs, legal repre-
sentatives and assigns, covenants with IBP to forever
refrain from aiding, abetting or in any way assisting
any third person not a party to this agreement in the
bringing of any action or the prosecution of any claim
or demand of whatever kind or nature against IBP
for any matter, fact, circumstances, happening or thing
whatsoever occurring or failing to occur from the be-
ginning of the world to the day of the date of these
presents. BAGLEY hereby agrees that any breach of
this covenant by him would not be adequately compen-
sable in damages and agrees that, in the event of any
breach by him of said covenant, IBP shall, in addition
to any claim for damages for breach of covenant to
which it may be entitled, be authorized and entitled
to seek and obtain equitable relief by way of injunc-
tion or otherwise in a court of competent jurisdiction.
sohtillidas
cers as representatives of the union and its members. The
purpose of the amendment as stated in plaintiff’s brief
was to ‘‘utilize .. . the procedure provided in Rule 23.2 of
the Federal Rules of Civil Procedure added in 1966 to
avoid the absurdities created by the ancient doctrine that
a labor union takes the citizenship of its members. . . .’”
Defendants Hawkins, Cochrane, Stern, Gorman, Poole
and Talarico moved to dismiss, again on the basis of lack
of subject matter jurisdiction. Defendants contend that
Rule 23.2 FRCP is not a class action rule and that the
citizenship of all union members is still the relevant deter-
minant of diversity.
The question here is whether Rule 23.2 establishes a
class action with respect to unincorporated organizations
thereby making the citizenship of the representatives of
the class, together with the citizenship of plaintiff, solely
determinant of diversity. If the rule is a class action rule,
jurisdiction is established since plaintiff and the represen-
tative parties are of diverse citizenship. If the rule is not
a class action rule the court lacks jurisdiction since it is
undisputed that some members of the Union are of the
same citizenship as plaintiff.
The rule states:
An action brought by or against the members of
an unincorporated association as a class by naming
certain members as representative parties may be
maintained only if it appears that the representative
parties will fairly and adequately protect the interests
of the association and its members. In the conduct of
the action the court may make appropriate orders cor-
responding with those described in Rule 23(d), and
the procedure for dismissal or compromise of the ac-
tion shall correspond with that provided in Rule 23(e).
Wright & Miller and Moore agree that this rule provides
a mechanism for class action treatment of unincorporated
*IBP’s Opposition to the Hawkins and Cochrane Motion
to Dismiss, filed August 1, 1977, at 5.
ee
associations.‘ It is argued, however, that some courts have
disagreed and held that the rule is merely a capacity-to-
sue-or-be-sued provision to give entity treatment to an
association. The Advisory Committee’s Note to Rule 23.2
lends support to this latter interpretation.°
An examination of the rule itself and the writings of
the commentators leads this court to conclude that Rule
23.2 FRCP is a class action provision and that plaintiff
may assert its claim against the union as a class. The rule
itself incorporates by express reference portions of Rule
*See 7A Wright & Miller, Federal Practice and Proce-
dure: Civil §1861 (1972); 3B Moore, Federal Practice,
723.2.02 (2d ed. 1977).
* See Lee v. Navarro Savings Ass’n, 416 F.Supp. 1186,
1190 (N.D. Texas 1976); Suchem, Inc. v. Central Aguirre
Sugar Co., 52 FRD 348, 351 (D. Puerto Rico 1971). Lee
and Suchem are distinguishable, however, because neither
court found that unincorporated associations did have
entity status in Texas and Puerto Rico and therefore Rule
23.2 was not available. The Iowa rule, applicable by oper-
ation of Rule 17(b) FRCP, holds that unincorporated as-
sociations do not have entity status and cannot sue or be
sued directly in the absence of waiver or estoppel. See
Boyer v. Iowa High School Athletic Ass’n, 138 2d 914,
915 (Iowa 1965). The language of Wilson & Co. v. United
Packinghouse Wkrs. of America, 181 F.Supp. 809, at 817
(N.D. Ia. 1960) and Coughlon v. Iowa High School Athletic
Ass’n, 150 NW2d 660, at 662 (Iowa 1967) put in context
here, is not otherwise. Finding that Rule 23.2 is available,
the issue before the court here was never addressed by
Lee nor was it properly before the court in Suchem.
*The Advisory Committee’s Note states:
Although an action by or against representatives of
the membership of an unincorporated association has
often been viewed as a class action the real or main
purpose of this characterization has been to give ‘‘en-
tity treatment’? to the association when for formal
reasons it cannot sue or be sued as a jural person
under Rule 17(b)
39 FRD 108 (1966).
ey Tae
23 FRCP." The requirements of numerosity, commonality
and typicality contained in Rule 23 may be subsumed im-
plicitly into Rule 23.2.* In any event they are present here.
This is in fact a bona fide unincorporated association and
there is no suggestion that Rule 23.2 was utilized to evade
the constraints on the court’s jurisdiction.® See 7A Wright
& Miller, Federal Practice and Procedure: Civil §1861, at
461 (1972). Accordingly, this action is maintainable as a
class action; the citizenship of the representative defen-
dants and plaintiff are diverse; motion to dismiss for lack
of subject matter jurisdiction denied. See generally Pa-
trician Towers Owners, Inc. v. Fairchild, 513 F.2d 216, 220
(4th Cir. 1975); Management Television Systems, Inc. v.
National Football League, supra.
Motton to Dismiss for Failure to State
a Claim Upon Which Relief Can be Granted
Defendants Hawkins, Cochrane, Krieger and Stern next
move to dismiss for failure to state a claim for which relief
* Defendants point out that the provisions for notice and
pleading present in Rule 23 are absent from Rule 23.2.
This absence may be explained by the fact that the prob-
lems of defining the class and giving notice to the class
that plague Rule 23 class actions are minimized in the con-
text of an unincorporated association where the class is
fairly defined and notice easily obtained.
* See Merkey v. Board of Regents of State of Florida,
344 F.Supp. 1296, 1303 (N.D. Fla. 1972) nity on other
grounds 493 F.2d 790 (5th Cir. 1973). But see Manage-
ment Television Systems, Inc. v. National Football League,
52 FRD 162, 164 (E.D. Pa. 1971). 7A Wright & Miller,
supra; 3B Moore, supra.
*As defendants point out in Reply Brie
1, 1977 ct 8 p ply f filed October
It is well-settled that . .. [diversity] jurisdiction is
available . . . in a traditional class action under Rule
23 where only the citizenship of class representatives
is considered in determining whether diversity exists.
See Montgomery Ward ¢ Co. v, Longer, 168 F.2d 182
(8th Cir, 1948).
oe < ae
can be granted. All complain of a lack of specificity and
factual allegations—in the case of defendants Cochrane
and Hawkins, as to the allegations in the complaint of
breach of fiduciary duty and conspiracy; in the case of de-
fendant Krieger, as to the allegations in the complaint of
inducing breach of contract; in the case of defendant Stern,
as to all of the above.
The standard for a motion to dismiss is that such a mo-
tion cannot be granted unless it appears to a certainty that
plaintiff is entitled to no relief under any state of facts
which could be proved in support of the claim. Cruz v.
Beto, 405 U.S. 319, 322 (1972). In this light defendants’
motions fail and are denied.
Motion to Enjoin Prosecution of Separate
Action in Liew of Compulsory Counterclaim
Plaintiff sought, by this motion, to prevent defendants
Hawkins and Cochrane from pursuing an abuse of process
action in the United States District Court for the Southern
District of Towa. However, since that action was dismissed
by Judge Stuart on November 17, 1977, this motion is
denied as moot.
Motions for Protective Order
and Motions to Compel
A number of motions for protective orders and corre-
sponding motions to compel have been filed in this action.
In some instances the granting of one motion requires the
denial of another. In each of these instances that result
will be indicated.
The first motions for protective orders were filed by de-
fendants Cochrane and Hawkins on July 22, 1977. They
were unaccompanied by an affidavit of good faith attempts
at resolution by alternate means and the movants were
notified that no further action would be taken until Rule
16E of the Local Rules was complied with. Cochrane and
Hawkins filed essentially the same motion for protective
order, with affidavit, on August 30, 1977. The substance of
see
the motion sought protection for documents subject to dis-
covery requests in the antitrust suit M.D.L. No. 248 until
such time as the documents are discoverable there. The
motion also sought to protect documents alleged to be pro-
tected by the attorney-client privilege and work-product
immunity. Finally, incorporating by reference a response
to a request for production of documents, the defendants
refused to produce requested documents so long as their
motions to dismiss remained outstanding. Plaintiff’s re-
sponse was to move to compel production of those docu-
ments contained in its first request.
The overriding rationale applied with respect to all dis-
covery motions is that discovery provisions are to be
broadly and liberally construed. Hickman v. Taylor, 329
U.S. 495, 507 (1947); accord Schlagenhauf v. Holder, 379
U.S. 104, 114-15 (1964). Taking defendants’ last claim first,
it is clear that this matter has been resolved by the court’s
ruling today. As to the claim that the documents are pro-
tected by work-product immunity and attorney-client privi-
lege the court concludes that a blanket invocation of these
doctrines to bar discovery is inappropriate. In this case,
where state law supplies the rule of decision, Rule 501
FREv, the burden of establishing attorney-client privilege
is on the defendants. Bailey v. Chicago, Burlington &
Quincy Ratlroad Co., 179 NW2d 560, 564 (Iowa 1970).
That burden cannot be met by resort to a privilege incan-
tation. The assertion must be document-specific with a suf-
ficient articulation of the underlying circumstances and
general substance, and identification of the parties involved,
to establish a prima facie showing of privilege. This stan-
dard applies to the assertion of work-product immunity
“ _ In this instance defendants have not borne this
urden.
The claim that defendants are protected from discovery
requests pending in MDL No. 248 until the documents are
allowed to be discovered in that action cannot be accepted.
The effect of an assent to this idea would subordinate this
action and ancillary discovery matters to another case filed
in another district court. Discovery here cannot be predi-
aS
cated on what that court will do. However, this does not
mean that the court is insensitive to the potential for inter-
ference with the conduct of orderly discovery in MDL No.
248. All parties have indicated that a voluminous amount
of materials are subject to requests for discovery here.
Bearing this in mind, together with the potential for inter-
ference with MDL No, 248, the court orders defendants
Hawkins and Cochrane to comply with plaintiff’s first re-
quest for production of documents” by producing the
documents in the usual manner or by affording plaintiff
a reasonable opportunity to examine, audit, or inspect
such records and to make copies, compilations, abstracts,
or summaries at the place where the records are kept or
at any other mutually agreed-upon place. Cf. Rule 33(c)
FRCP. In the event discovery of the materials in this
fashion results in undue interference with MDL No. 248
suitable protection may be obtained from this court on a
particularized showing.
Plaintiff moved for a protective order on October 28,
1977, prohibiting defendants’ inquiry into matters alleg-
edly protected by attorney-client privilege, prohibiting
inquiry into purported illegal acts by plaintiff, and re-
stricting use of IBP business information to defense coun-
sel for purposes of this case and to Cochrane and Hawkins
for the purposes of MDL No. 248. The court grants the
protective order limiting the usage of IBP’s confidential
business information and denies the motion regarding the
claim of attorney-client privilege and the claim of the ir-
relevance of illegal acts.
Plaintiff falls prey to the same lack of specificity that
defendants Hawkins and Cochrane do regarding a claim
of attorney-client privilege. A mere recitation of the privi-
lege litany is insufficient. The standards applicable to meet-
ing the burden of establishing a privilege set out above
The court notes that defendants maintain that they
have no documents falling within Specification No. 6 of
plaintiff’s first request for production of documents. On
this representation defendants need not comply.
— A-10—
apply here. Plaintiff cannot meet that burden by request-
ing protection from inquiry into ‘‘matters protected by
IBP’s attorney-client privilege’’.
The court also rejects the claim that illegal acts by IBP
are irrelevant to the case. The claim that the covenant be-
tween IBP and Bagley was intended to conceal illegal acts
is central to defendants’ case. A relevance objection is un-
availing in this context.”
Defendants Cochran and Hawkins filed a motion to com-
pel answers to questions propounded during an oral de-
position of William L. Heubaum, corporate counsel for
IBP. The court has examined the questions and the con-
text in which they were asked. It seems apparent that
work-product immunity or the attorney-client privilege is
applicable to the information sought.’* Defendants, how-
ever, seek to overcome the immunity or privilege by invok-
ing the improper purpose exception." Defendants’ burden
in this respect is heavy—they must make a prima facie
" Plaintiff would have the court determine in the guise
of a protective order, in addition to its motion for sum-
mary judgment discussed infra, that the Bagley covenant
does not offend public policy. The court is not willing to
make that determination at this stage of the litigation.
“This is not true as to all information sought. For ex-
ample, counsel for IBP claimed attorney-client privilege
as to the number and bulk of file drawers regarding anti-
trust at Heubaum’s office (Heubaum deposition, Volume
I at 146-147) and as to whether certain documents, often-
times the contents of which were disclosed, were sent to
IBP’s attorneys (Heubaum deposition, Volume I at 155,
210-213). This information is clearly not privileged.
** Defendants also invoke the general rule that privilege
does not lie when business, as opposed to legal, counsel
is sought. Though it may be true that a corporation cannot
merely utilize general counsel as a conduit to protect all
its documents and other information it is also true that de-
fendants have not shown in even the slightest degree that
this activity has occurred here. Merely noting that Heu-
baum serves Iowa Beef as Secretary and Vice-President
as well as general counsel is insufficient.
— A-11 —
showing that the information sought was transmitted in
furtherance of a crime or tort. Pfizer, Inc. v. Lord, 456
F.2d 545, 549 (8th Cir. 1972). See In re Murphy, 560 F.2d
326, 338 (8th Cir. 1977). Defendants assert that ‘‘[t]he
testimony in the present case . . . establishes conclusively
the existence of antitrust violations by IBP’’. This asser-
tion is exaggerated. In any event defendants must make
a prima facie showing that the communication was pur-
suant to the crime or tort. See In re Murphy, supra. No
such showing has been made. Except as noted herein, the
motion to compel answers is denied.
Plaintiff moved to compel defendant Bagley to answer
deposition questions which he has refused to answer on
grounds of attorney-client privilege. An examination of
the questions reveals that the information sought would
be privileged. Plaintiff maintains, however, that the privi-
lege was waived by Bagley’s answer, paragraph 10, which
allegedly injects a state-of-mind issue into the case. That
paragraph states in part:
It is affirmatively alleged that paragraph 3.2 of the
Settlement Agreement was obtained by fraud and
misrepresentation on the part of IBP.
Since this response does inject the question of reliance on
IBP’s statements or acts’** Bagley cannot now prevent
inquiry directed to that issue. This information is vital to
plaintiff to meet Bagley’s affirmative defense of fraud and
misrepresentation. See Haymes v. Smith, 73 FRD 572, 577
(W.D.N.Y. 1976); Hearn v. Rhay, 68 FRD 574, 581 (E.D.
Wash. 1975). Defendant Bagley is directed to answer
questions relevant to the question of reliance; the attorney-
client privilege is waived.
Motion For Summary Judgment
IBP moves for summary judgment against Bagley on the
question of liability for breach of the settlement agreement
* See 37 Am. Jur. 2d, Fraud and Deceit $223 et seq; cf.
W. Prosser, Torts, 714 et seq (4th ed. 1971).
— A-12—
with IBP and for violation of the fiduciary duty allegedly
owed by IBP.
IBP has a particularly heavy burden of persuasion—
the movant must show that there is no genuine issue of
any material fact and that it is entitled to judgment as a
matter of law. Rule 56(c) FRCP; see Poller v. Columbia
Broadcasting System, Inc., 368 U.S. 464, 467 (1962). The
court is required to view the facts in the light most favor-
able to the party opposing the motion and to give to that
party the benefit of all reasonable inferences to be drawn
from the facts. Adickes v. S. H. Kress & Co., 398 U.S. 144,
158-59 (1970). The court cannot say, at this point in the
litigation, that there is no genuine issue of material fact.
Furthermore, though IBP attempts to de-emphasize the
importance of the motion by carefully limiting it to Bagley,
the preclusive effect of the ruling, if only from a reasoning
standpoint, is apparent. The court considers it inappro-
priate at this time to resolve this issue and therefore a
major portion of the lawsuit. Further discovery and a vig-
orous analysis of the relevant legal principles might make
summary judgment feasible in the future.
It is therefore
ORDERED
1. Motions 1-6 inclusive and 8 above are denied.
2. Motion 7 is granted.
3. Motions 9 and 10 granted and denied in part.
February 10, 1978.
Epwarp J. McManus, Chief Judge
United States District Court
Seo
sis —
IN THE UNITED STATES DISTRICT COURT —
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
IOWA BEEF PROCESSORS, INC.,
Plaintiff,
vs.
PATRICK E. GORMAN, HARRY R. POOLE, and
SAM TALARICO, as representatives of the members of
AMALGAMATED MEAT CUTTERS AND BUTCHER
WORKMEN OF NORTH AMERICA, AFL-CIO; IRV-
ING STERN; ALBERT J. KRIEGER; LEX HAWK-
INS; JOHN A. COCHRANE; HUGHES A. BAGLEY;
and HANS AARSEN.
Defendants.
NO. C 77-4040
ORDER
This matter is before the court on Iowa Beef Proces-
sors, Inc.’s unresisted motion to have certain documents
filed under seal with the court, filed October 13, 1978 and
defendant Hughes A. Bagley’s resisted motion to lift pro-
tective order or in the alternative for guidelines, filed
November 1, 1978.
The thrust of the motions involve an attempt by the
Small Business Subcommittee on SBA and SBIC author-
ity and General Small Business Problems of the House
of Representatives (Committee) to secure access to certain
documents produced by defendant Bagley pursuant to
plaintiff’s first request for documents and which are pres-
ently under a protective order issued by this court.
Specifically, on February 13, 1978 this court granted
IBP’s motion for protective order restricting the use of
Bagley’s discovery material to counsel in this case for the
purposes of this case and the Beef Industry Antitrust
Litigation now pending in Dallas, Texas. The basis on
which the protective order was originally issued was that
— A-14—
the documents contained confidential information concern-
ing IBP’s business practices, etc. which would be detri-
mental to IBP’s business if given to competitors.
From a review of the record it is the view of the court
that the protective order should be modified as to the
documents requested. The court can ascertain no great
interference with its ability to proceed in this suit if the
committee is allowed access to the records and the right
to copy them as long as the originals still remain accessi-
ble to the parties to prosecute this action. IBP is free to
approach the committee as to the scope of the use of the
documents.
It is therefore
ORDERED
This court’s protective order is modified to allow defen-
dant Hughes A. Bagley to comply with the committee sub-
poena served upon him in this action.
November 22, 1978.
Epwarp J. McManus, Chief Judge
United States District Court
ae teat cece rma nme
ee ee
ae IE LE GA Ral le iN
— A-15 —
IN THE
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
IOWA BEEF PROCESSORS, INC.,
Plaintiff-A ppellant,
Vv.
HUGHES A. BAGLEY,
Defendant-A ppellee.
No. 78-1855
Appeal from United States District Court
for the Northern District of Iowa,
Western Division.
Chief Judge Epwarp J. McManus, Presiding.
ORDER
This case having come before the undersigned upon ap-
plication of Plaintiff-Appellant, Iowa Beef Processors,
Ine. (IBP) for suitable orders preserving appellate juris-
diction of this Court and for a stay pending appeal of the
Order of the United States District Court for the Northern
District of Iowa modifying a protective order covering
certain documents procured and sought to be procured
from one Bagley by the Committee on Small Business of
the United States House of Representatives; and the Ap-
pellant having appeared by its attorney, Edward W.
Rothe, and Special Counsel John Fitzgibbons having spe-
cially appeared for the House Committee;
And it appearing that the questions raised by the
pleadings may directly or indirectly call into question
both the power of the Congress to conduct unimpeded law-
ful pursuit of its investigative functions and authority of
the Court to protect its litigation processes;
And it appearing that the Honorable Neal Smith, Chair-
man of the Committee, in recognition of the nature of the
— A-16 —
problems involved, has agreed that no portion of the ma-
terials which have heretofore come into possession of the
Committee as a result of service of its subpoena dated
October 30, 1978, and directed to Hughes A. Bagley of
Sioux City, Iowa, will be disclosed publicly or privately
or otherwise used prior to December 16, 1978, in order
that the parties may present and the Court may consider
in an orderly way the question presented; now therefore,
IT IS ORDERED that the order signed by Chief Judge
McManus of the United States District Court for the
Northern District of Iowa on November 22, 1978, and filed
on November 24, 1978, modifying the protective order
granted to IBP on February 13, 1978, to permit Hughes
Bagley to respond to a purported subpoena from the Small
Business Committee of the United States House of Repre-
sentatives is hereby stayed temporarily until, and includ-
ing, December 16, 1978; and,
IT IS FURTHER ORDERED that pursuant to Chair-
man Smith’s agreement hereinabove mentioned, the Com-
mittee Staff and others acting in concert with them shall
take no action with respect to the materials, the subject
of this order, other than to protect them from scrutiny
and disclosure during the effective life of this order.
DATED this 4th day of December, 1978.
J. Smita Hen ey,
United States Circuit Judge
oe ee ee te a en i re eS ee ate Se ae eh Kn a ne Ee so oe 88
— A-17 —
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
* No. 78-1855
IOWA BEEF PROCESSORS, INC.,
Appellant,
v.
HUGHES A. BAGLEY,
Appellee.
Appeal from United States District Court
for the Northern District of Iowa.
Submitted: December 12, 1978
Filed: December 14, 1978
Before Bricut, Hentey and McMuuian, Circuit Judges.
Per Curiam.
This case comes before the court on motion of Iowa Beef
Processors, Inc. (IBP) for a stay pending appeal and for
other suitable orders in the nature of extraordinary writs
which would preserve appellate jurisdiction. We deny the
stay and decline to issue such orders.
This case is the most recent manifestation of a lengthy,
and increasingly acrimonious, course of litigation involv-
ing IBP. IBP has been the subject of numerous private
antitrust suits in recent years. Several of these lawsuits
have been brought by members of a group calling them-
selves the Meat Price Investigators Association and have
been pursued by two lawyers, Lex Hawkins and John
Cochrane. The Judicial Panel on Multidistrict Litigation
transferred a number of these private antitrust cases to
the United States District Court for the Northern District
of Texas for consolidated pretrial proceedings. See In Re
Beef Industry Antitrust Litigation, 432 F.Supp. 211 (Jud.
Pan. Mult. Lit. 1977); In Re Beef Industry Antitrust Liti-
gation, 419 F.Supp. 720 (Jud. Pan. Mult. Lit. 1976). As
part of the discovery proceedings in these Texas cases,
~
—~ =
the district court entered a protective order prohibiting
attorneys Cochrane and Hawkins, among others, from dis-
closing the contents of documents obtained through discov-
ery on the defendants, including IBP. It appears that some
of these documents are the same as the documents in ques-
tion in this case.
The instant litigation was begun by IBP in the Northern
District of Iowa on August 1, 1977. IBP sued a number
of defendants including Hawkins, Cochrane, and one
Hughes A Bagley, a former vice president of IBP. IBP’s
complaint alleged that Bagley had taken a number of
documents with him when he left IBP’s employ in 1975
and that these documents contained confidential business
information which would damage IBP’s business if they
were disclosed. The complaint further alleged that Bagley
had disclosed certain confidential information and records
to Hawkins, Cochrane, and others in violation of various
contractual obligations and common law fiduciary duties.
The case was referred to the docket of Chief Judge Mc-
Manus who on February 13, 1978 issued an order deciding
a number of pretrial motions. The order granted IBP’s
motion for a protective order preventing disclosure of
IBP’s confidential business information and limiting its
use to defense counsel and to Hawkins and Cochrane for
the purposes of the consolidated Texas cases.
Over a period of time, it appears that the House Sub-
committee on SBA and SBIC Authority and General Small
Business Problems (the Subcommittee) of the House Com-
mittee on Small Business has become interested in alleged
price-fixing or other antitrust violations in the meat in-
dustry. In that connection, the Subcommittee served
Hawkins and Cochrane with congressional subpoenas duces
tecum compelling them to produce a number of documents,
including some which were subject to the protective order
issued in connection with the consolidated Texas cases.
Hawkins and Cochrane moved to dissolve the protective
order. The motion was denied by United States District
A ae its Bm
— A-19 —
Judge William M. Taylor, who held that the Subcommit-
tee’s attempt to subpoena the documents covered by the
protective order violated the due process clause. In Re
Beef Industry Antitrust Litigation, 1978-2 Trade Cases
7 62, 189 (N.D. Tex. August 17, 1978). Judge Taylor’s de-
cision is currently on appeal to the Fifth Circuit.
Frustrated to this point in its efforts to obtain this ma-
terial in the Texas proceedings, the Subcommittee changed
tactics. In late October, 1978 it served a similar subpoena
duces tecum on Bagley, requiring him to produce a num-
ber of documents covered by Judge McManus’ protective
order. Bagley moved to dissolve the protective order and
IBP opposed the motion. By order filed November 24,
1978 Judge McManus granted Bagley’s motion and lifted
the protective order to the extent necessary to allow
Bagley to comply with the subpoena.
John M. Fitzgibbons, Special Counsel to the Subcom-
mittee, was apprised of Judge McManus’ order in a tele-
phone conversation the same day. On November 27 a Sub-
committee investigator, Nick Wultich, appeared at the
offices of Bagley’s counsel and took physical possession of
seven boxes of documents.
IBP’s counsel learned of the order on November 28,
and subsequently learned that the Subcommittee had ac-
quired the documents. On November 30 IBP filed a notice
of appeal from the order lifting the protective order. On
December 4 IBP filed this motion for a stay and other
appropriate relief. By order dated December 4 Judge
Henley stayed the district court order pending a hearing
before a panel of the court and recited an agreement
whereby the Subcommittee and its staff would take no
action with respect to the documents until, and including,
December 16. The matter came on for a hearing before
this panel on December 12.
Having carefully considered the papers and oral argu-
ments submitted by IBP and the Subcommittee, whose
Special Counsel appeared specially, we are of the opinion
— A298 —
that a stay of the district court order is both inappropri-
ate and unnecessary at this time.
We begin by noting the very limited scope of Judge
McManus’ order. The protective order of February 13 re-
mains in effect as to all other parties to the litigation and
as to any disclosure by Bagley other than as necessary to
comply with the subpoena.
In regard to the disclosure to the Subcommittee, it has
represented in its papers filed in this court and during
oral argument that it has no intention of making public
any of these documents, if ever, until after the House of
Representatives begins its next session in January, 1979.
In good faith, we must accept these representations made
by members of a coordinate branch of government at face
value. We are further assured that the Subcommittee and
its Special Counsel will take all appropriate precautions
to insure that these documents are disclosed only to the
extent necessary to allow the Subcommittee staff to begin
the job of collating and classifying the information con-
tained therein. In present circumstances any disclosure
beyond the immediate needs of the Subcommittee and its
staff would appear to be both unnecessary and a matter
of grave import for all concerned.
Given the Subcommittee’s representations to us and the
limited nature of Judge McManus’ order, we are of the
opinion that granting a stay and compelling the return
of the documents at this time is both unnecessary as a
practical matter and inappropriate as a matter of comity.
Such action would inevitably, albeit erroneously, be viewed
as an expression of our lack of faith in the Subcommittee’s
representations to us. Such an expression would be par-
ticularly inappropriate in view of the Subcommittee’s past
cooperation with this court.
We are aware that this case presents serious jurisdic-
tional and substantive questions and implicates funda-
mental concepts of legislative and judicial authority. Ac-
cordingly, we deem it appropriate that the case be heard
Se
on an expedited basis. The case will be scheduled for argu-
ment on the merits on January 9, 1979, and the Clerk is
directed to work out an appropriate briefing schedule with
the parties.
The motion for a stay pending appeal and for other
appropriate relief is denied.
A true copy.
Attest:
Clerk, U. S. Court of Appeals, Eighth Circuit.
— A-2 —
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
No. 78-1855
IOWA BEEF PROCESSORS, INC.,
Appellant,
v.
HUGHES A. BAGLEY,
Appellee.
Appeal from United States District Court
for the Northern District of Iowa.
Submitted: January 9, 1979
Filed: February 7, 1979
Before Bricht, Hentey and McMuiuan, Circuit Judges.
Hentey, Circuit Judge.
Iowa Beef Processors, Inc. (IBP) appeals from the dis-
trict court order which partially lifted a protective order
entered in the course of discovery proceedings in this di-
versity suit. Treating the notice of appeal as a petition
for a writ of mandamus, we grant the writ, vacate the dis-
trict court’s order, and remand the case with directions
to reinstate, in full, the protective order.
I.
IBP, which is described in the briefs as the world’s larg-
est meat packing concern, has been the target of numerous
private antitrust suits in recent years. Many of these law-
suits have been brought by members of an organization
calling itself the Meat Price Investigators Association and
have been pursued by two lawyers, Lex Hawkins and John
Cochrane. A number of these cases have been transferred
to the United States District Court of the Northern Dis-
trict of Texas for consolidated pretrial proceedings. See
In re Beef Industry Antitrust Litigation, 432 F.Supp. 211
(Jud. Pan. Mult. Lit. 1977); In re Beef Industry Anti-
trust Litigation, 419 F.Supp. 720 (Jud. Pan, Mult. Lit.
— A-23 —
1976). This antitrust litigation has, in turn, generated a
massive amount of collateral litigation.
The instant case was begun by IBP in the Northern
District of Iowa on August 1, 1977. IBP sued a number
of defendants including Hawkins, Cochrane, and one
Hughes A. Bagley, a former vice president of IBP. In its
complaint, IBP alleged that Bagley had taken a number
of documents with him when he left [BP’s employ in 1975
and that these documents contained confidential business
information which, if disclosed, would damage IBP’s busi-
ness. IBP further alleged that Bagley had disclosed cer-
tain confidential information and records to Hawkins,
Cochrane, and others in violation of various contractual
obligations and common law fiduciary duties. The case
came before Chief Judge McManus who on February 13,
1978 issued an order deciding a number of pretrial mo-
tions. In part, the order granted IBP’s motion for a pro-
tective order preventing disclosure of IBP’s confidential
business information and limiting its use to defense coun-
sel in the Iowa case and to Hawkins and Cochrane in con-
nection with Texas antitrust cases,
Over a period of time, the House Subcommittee on
SBA and SBIC Authority and General Small Business
Problems (the Subcommittee) of the House Committee
on Small Business has become interested in pricing prac-
tices in the meat industry. In that connection, the Sub-
committee served Hawkins and one Glen L. Freie with
congressional subpoenas duces tecum compelling them to
produce a number of documents, including some which
were subject to a protective order issued in connection
with the Texas antitrust cases.’ Hawkins and Freie moved
1In addition to the two subpoenas served by the Sub-
committee on SBA and SBIC Authority and General Small
Business Problems, two subpoenas were served by the
Subcommittee on Oversight and Investigation of the In-
terstate and Foreign Commerce Committee of the House
of Representatives. The latter subcommittee is not in-
volved in the instant case.
as yao
to dissolve the protective order. Their motion was denied
by United States District Judge William M. Taylor, who
held that the Subcommittee’s attempt to subpoena the
documents covered by the protective order violated the
due process clause. In Re Beef Industry Antitrust Litiga-
tion, 457 F. Supp. 210 (N.D. Tex. 1978). An appeal from
that decision was recently dismissed by the Fifth Circuit,
Neal Smith, et al. v. The National Provisioner, et al., No.
78-3344 (5th Cir. February 2, 1979).
Frustrated in its efforts to obtain this material in the
Texas proceedings, the Subcommi‘tee changed tactics. In
late October, 1978 it served a similar subpoena duces
tecum on Bagley, requiring him to produce a number of
documents covered by Judge McManus’ February 13 pro-
tective order. Bagley moved to dissolve the protective
order and IBP opposed the motion. By order filed Novem-
ber 24, 1978 the district court granted Bagley’s motion
and partially lifted the protective order to the extent
necessary to allow Bagley to comply with the subpoena.
It is from this order that IBP appeals.
In a telephone conversation John M. Fitzgibbons, Special
Counsel to the Subcommittee, was apprised of the district
court’s order the day it was entered. On November 27 a
Subcommittee investigator, Nick Wultich, appeared at the
office of Bagley’s counsel and took physical possession of
seven boxes of documents.
IBP’s counsel learned of the order on November 28 and
subsequently learned that the Subcommittee had acquired
the documents. On November 30 IBP filed a notice of
appeal from the order lifting the protective order. On
December 4 IBP filed a motion for a stay and other ap-
propriate relief in this court. By order dated December
4 Judge Henley stayed the district court order pending a
hearing before a panel of the court and recited an agree-
ment whereby the Subcommittee and its staff would take
no action with respect to the documents until, and includ-
ing, December 16. The matter came on for a hearing be-
fore this panel on December 12, and on December 14 we
issued an order denying the motion for a stay, but or-
— A-25 —
dering the appeal expedited. lowa Beef Processors, Inc.
v. Hughes A. Bagley, No. 78-1855 (8th Cir. Dec. 14, 1978).
Despite the strenuous efforts of counsel to persuade us
otherwise, we find that the case in its current posture pre-
sents a relatively narrow question, 1.e., did the district
court abuse its discretion in granting Bagley’s motion
to lift the protective order? Prior to addressing this ques-
tion, however, we must first examine our jurisdiction.
II.
The district court order partially lifting the protective
order is clearly not a “final decision” as that term is used
in 28 U.S.C. § 1291, because the order is not “one which
ends the litigation . . . and leaves nothing for the court
to do but execute the judgment.” Catlin v. United States,
324 U.S. 229, 233 (1945). Thus, unless the order falls
within a statutory or judicially-created exception to
the finality doctrine, appellate review at this time is pre-
mature.
The order is not appealable under the Interlocutory
Appeals Act, 28 U.S.C. § 1292. The order is not one grant-
ing or denying an injunction under § 1292(a)(1) nor did
IBP move for certification under § 1292(b).
IBP argues that the order partially lifting the pro-
tective order is a “collateral order” within the meaning
of Cohen v. Beneficial Industrial Loan Corp., 337 US.
541 (1949). Most courts, including this one, have held that
orders compelling the production of documents or testi-
mony are not appealable as collateral orders or other-
wise. See, e.g., Miller v. Reighter, No. 78-1276 (8th Cir.
Sept. 20, 1978); Gialde v. Time, Inc., 480 F.2d 1295 (8th
Cir. 1973) ; Childs v. Kaplan, 467 F.2d 628 (8th Cir. 1972) ;
Borden Co. v. Sylk, 410 F.2d 843 (3d Cir. 1969); Para-
mount Film Distributing Corp. v. Civil Center Theatre,
Inc., 333 F.2d 358 (10th Cir. 1964). We view an order par-
tially lifting a protective order as the functional equiva-
lent of an order compelling production of documents or
testimony and find the reasoning of the above-listed cases
=?
to be persuasive in this case. As the court observed in
Borden Co. v. Sylk, swpra, 410 F.2d at 845-46:
We have detected what appears to be an irresisti-
ble impulse on the part of appellants to invoke the
‘collateral order’ doctrine whenever the question of
appealability arises. Were we to accept even a small
percentage of these sometime exotic invocations, this
court would undoubtedly find itself reviewing more
‘collateral’ than ‘final’ orders.
a @
Every interlocutory order involves, to some degree,
a potential loss. That risk, however, must be balanced
against the need for efficient federal judicial admini-
stration as evidenced by the Congressional prohibition
of piecemeal appellate litigation. To accept the ap-
pellant’s view is to invite the inundation of appellate
dockets with what have heretofore been regarded as
nonappealable matters.
Accordingly, we hold that we have no appellate juris-
diction. This does not, however, end our consideration
of possible bases of jurisdiction.
As an alternative to appellate jurisdiction, IBP con-
tends that this is an appropriate case for us to invoke
our discretionary writ-issuing authority under the All
Writs Act, 28 U.S.C. § 1651(b),? and issue a writ of man-
damus compelling reinstatement of the protective order
and/or return of the documents.’
*The Act provides:
The Supreme Court and all courts established by
Act of Congress may issue all writs necessary or ap-
propriate in aid of their respective jurisdictions and
agreeable to the usages and principles of law.
* Although we have occasionally treated a notice of ap-
peal as a petition for a writ of mandamus, see, e.g., Wilkins
v. Erickson, 484 F.2d 969, 971 (8th Cir. 1973), we em~
phasize that we will not do so as a matter of course in
every case where questions about appellate jurisdiction
— £97 —
We begin by noting that the power conferred by the
All Writs Act “is meant to be used only in the exceptional
case where there is clear abuse of discretion or “usurpa-
tion of judicial power.’” Bankers Life d& Cas. Co. v. Hol-
land, 346 U.S. 379, 383 (1953). In addition, invocation of
power under the Act must be carefully circumscribed, lest
appellate courts find themselves reviewing “nonappealable
orders on the mere ground that they may be erroneous.”
Will v. United States, 389 U.S. 90, 98 n.6 (1967). Bearing
in mind these salutary and well-established restrictions,
we nevertheless conclude that this case presents an appro-
priate occasion for us to invoke our power under the All
Writs Act.
First, a number of courts, including this one, have found
mandamus to be an appropriate vehicle to review orders
compelling the production of documents or testimony
claimed to be privileged or covered by other more general
interests in secrecy. See, e.qg., Diversified Industries, Inc.
v. Meredith, 572 F.2d 596 (8th Cir. 1978) (en banc) (at-
torney-client privilege); Usery v. Fitter, 547 F.2d 528
(10th Cir. 1977) (disclosure of identity of informer in
FLSA case); Breed v. United States Dist. Ct., 542 F.2d
1114 (9th Cir. 1976) (disclosure of personnel and inmate
files of state youth authority); Pfizer, Inc. v. Lord, 456
F.2d 545 (8th Cir. 1972) (attorney-client privilege) ; United
States v. United States Dist. Co., 444 F.2d 651 (6th Cir.
1971), aff'd, 407 U.S. 297 (1972) (disclosure to conspiracy
defendant of his monitored conversations); Harper &
Row Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir.
1970), aff'd by an equally divided court, 400 U.S. 348
(1971) (attorney-client privilege); Hartley Pen Co. v.
United States Dist. Ct., 287 F.2d 324 (9th Cir. 1961) (dis-
* (Continued)
are raised. In cases such as the instant one, however,
where the propriety of mandamus was raised from the
outset, where the mandamus issue has been fully briefed,
and where the interests of the district court have been
actively presented, the notice of appeal may properly be
treated as a petition for a writ of mandamus.
— A-B —
closure of secret formula acquired under license forbid-
ding disclosure). In this case, IBP claims that the docn-
ments disclosed to the Subcommittee are covered by the
attorney-client privilege and/or constitute trade secrets
in the nature of confidential business information.‘
Second, the unique circumstances in which disclosure of
these materials was allowed give rise to serious policy
considerations which we deem sufficiently compelling to
require immediate appellate attention. The parties have
not cited, nor has our research disclosed, any case involv-
ing comparable facts. In addition to the uniqueness of
the problem, it appears that the Subcommittee is engaged
in an ongoing investigation. Because it is not inconceiv-
able that other material generated in connection with
this liticration may be sought by the Subcommittee, the
questions presented here may well recur prior to any op-
portunity to review a final judgment.
Having found this case to be appropriate for review
by way of mandamus, we turn to the merits of the dis-
trict court’s order.
III.
On February 13, 1978 the district court entered a pro-
tective order restricting use of IBP business information
to defense counsel in the instant case and to Cochrane
and Hawkins for the purposes of the Texas antitrust
cases. In so doing, the court implicitly conceded that any
‘The order of February 13 granted IBP’s motion for
a protective order only to the extent that the material in
uestion constituted confidential business information. In
the same order, the district court rejected IBP’s claim
of attorney-client privilege. Accordingly, we are concerned
solely with the question of allegedly confidential business
information.
— A-29—
further disclosure would unduly harm IBP.° Yet, on No-
vember 24, without any showing that intervening circum-
stances had in any way obviated the potential prejudice
to IBP, the court allowed disclosure of these documents
to the Subcommittee without any constraints on the Sub-
committee’s use thereof.
Even more important than this abrupt and unexplained
turnabout is the fact that the documents ordered disclosed
to the Subcommittee were an important part of the subject
matter of the underlying lawsuit. That is, IBP alleged
that Bagley had breached both contractual and fiduciary
obligations to IBP by disclosing the contents of these docu-
ments and sought an injunction preventing further dis-
closure and compelling the return to IBP of all such docu-
ments. In these circumstances, the district court should
have maintained the status quo by carefully limiting dis-
closure of these documents pending determination of the
merits of IBP’s claim. The court’s order allowing dis-
closure to the Subcommittee, without any limitation on
its use of the documents could well render moot in part
IBP’s claims for relief in the underlying lawsuit.*
On this record, then, we are compelled to conclude that
the district court’s order partially lifting the protective
order was a clear abuse of discretion. Accordingly, we
grant the petition for a writ of mandamus, vacate the
district court’s order of November 24, and remand the
case with instructions to reinstate in full the protective
order entered February 13.’
°The party requesting a protective order must initially
show that the information sought to be protected is with-
in the scope of Rule 26(c) and that he might be harmed
by its disclosure. 8 C. WRIGHT & MILLER, FEDERAL
PRACTICE AND PROCEDURE, § 2043 at 300-01 (1970).
* We, of course, express no opinion as to the merit, if
any, of [BP’s claims for relief in the underlying lawsuit.
‘Out of what is, perhaps, an overabundance of caution,
we emphasize that this opinion should not be construed
as meaning that review by way of mandamus is aVailable
whenever a district court compels disclosure of material
=
We now turn to the Subcommittee and the relief sought
against it by IBP. At the outset, it should be noted that
the Subcommittee is not a party to the underlying liti-
gation nor a party to this appeal.* Nevertheless, IBP re-
quests that we order the Subcommittee to return the docu-
ments in question to the district court and to refrain from
revealing the contents of those documents.
IBP’s argument in this regard is premised on the al-
legation that the Subcommittee acquired the documents
in an unlawful manner. IBP argues that Rule 62(a) of
the Federal Rules of Civil Procedure operated automat-
ically to stay the order partially lifting the protective
order for a period of ten days and that the Subcommittee’s
“seizure” of the documents three days after the November
24 order violated the protective order.
* (Continued)
claimed to be protected by privilege or other interest in
confidentiality. The rationale for invoking mandamus in
such situations is twofold: (1) disclosure of the allegedly
privileged or confidential information renders impossible
any meaningful appellate review of the claim of privilege
or confidentiality; and (2) the disclosure involves ques-
tions of substantial importance to the administration of
justice. Cf. Harper & Row Publishers, Inc. v. Decker,
supra, 423 F.2d at 492. Where the case involves the at-
torney-client privilege, the importance of the privilege it-
self may serve to satisfy the second requirement. Jd. In
other cases where the claim of confidentiality is not so
intrinsically a part of the administration of justice, some
further showing is required. In the instant case, this show-
ing has been made by the unique facts of this case (es-
sentially making the case one of first impression), the
possibility that similar disclosure will be sought prior to
final judgment, and the fact that the allegedly confidential.
documents are themselves the subject matter of the under-
lying lawsuit.
* Special Counsel to the Subcommittee, John M. Fitz-
ibbons, appeared specially to brief and argue the case
fore this court.
— A-31 —
Rule 62(a) provides, in pertinent part:
Except as stated herein, no execution shall issue
upon a judgment nor shall proceedings be taken for
its enforcement until the expiration of 10 days after
its entry. (Emphasis added.)
The term “judgment” is defined in Rule 54(a), which reads
in pertinent part:
Judgment as used in these rules includes a decree
and any order from which an appeal lies.
As we have noted, no appeal lies from the district court’s
order of November 24 and, accordingly, the automatic ten-
day stay provision of Rule 62(a) does not apply in this
case. The Subcommittee’s action in taking possession of
poe documents thus was not in violation of the protective
order.
Because the Subcommittee has neither been made a
party to this litigation nor acted in such a manner as to
violate an existing court order, we find no basis on the
record now before us to compel the Subcommittee to re-
turn the papers it acquired as a result of its subpoena.
IV.
We are aware that this opinion is probably not the final
word in this controversy. As we have noted, however, the
scope of our inquiry at this stage is severely limited. Any
further action in this matter should be pursued in a dis-
trict court of competent jurisdiction® or before the Sub-
committee itself.
We are also cognizant of the fact that this dispute has,
at least in part, passed into the political arena. Indeed,
from the very beginning, it was apparent that non-juris-
prudential considerations have played an important part
* At least one court has held that jurisdiction and venue
in actions against congressional committees and their mem-
bers are normally proper in the United States District
Court for the District of Columbia. See Liberation News
Service v. Eastland, 426 F.2d 1379 (2d Cir. 1970).
— A-32—
in the parties’ litigation strategy. We dare to suggest that
those nah era have been well-advised to have
worked out an arrangement among themselves which would
take into account the competing interests, rather than at-
tempting to foist upon this court the responsibility for
resolving questions which are either beyond the scope of
appellate judicial authority or outside the meager record
of this case.
V.
The petition for a writ of mandamus is granted, the
district court order of November 24, 1978 is vacated, and
the case is remanded to the district court with instructions
to reinstate in full the protective order entered on Febru-
ary 13, 1978.
A true copy.
Attest:
Clerk, U.S. Court Of Appeals, Eighth Circuit.
To
APPENDIX B
In Tue Unitep Srates Districr Courr
For The Northern District Of Texas
Dallas Division
M.D.L. No. 248
In re: Beef Industry
Antitrust Litigation
MEMORANDUM OPINION
(Filed Aug 17 1978)
On March 16, 1978, two attorneys representing Plain-
tiffs in this litigation, John Cochrane and Lex Hawkins,
and an officer of a Plaintiff, Glenn L. Freie, moved to the
Court for leave to comply with Congressional subpoenas.
The four subpoenas were issued by two Congressional
subcommittees, the Subcommittee on Oversight and Investi-
gation of the Interstate and Foreign Commerce Com-
mittee and the Subcommittee on SBA and SBIC Authority
and General Small Business Problems of the House Com-
mittee on Small Business, both of the House of Repre-
sentatives of the United States, 95th Congress.
Parts of the materials subpoenaed are covered by a
protective order instituted in this proceeding.t On March
22, 1978, a hearing was held in this Court in order to
determine whether the motion of Messrs. Freie, Hawkins
and Cochrane should be granted. At the conclusion of that
hearing the Court orally announced its decision to deny
the motion, which announcement is appended to this opin-
* Parts are also covered by a protective order in the case
of Iowa Beef Processors, Inc. v. Gorman, et al, No. C-77-
446 (N.D. Iowa, W.Div.), which, of course, are not of kin
in this proceeding.
—_ B-2—
ion. A formal order to that effect was entered on April
4, 1978.
May 30, 1978, the Subcommittees moved by their counsel
and Counsel of the Clerk of the House for leave to file
their motion to grant Plaintiff’s request for leave to com-
ply or in the alternative for clarification or modification
of protective order. Leave to intervene and file the motion
was granted the following day, June 1, 1978, and the
motion was filed that day. A hearing on this motion was
had on July 27, 1978.
At both hearings and in their briefs the Defendants
in this proceeding whose documents were subpoenaed from
Plaintiffs strongly opposed the motions on many grounds.
It should be made clear at the outset that the technical
validity of the subpoena is not at issue. That question
has never been squarely put before this Court by either
of the two motions above mentioned or by any other
party to this proceeding. The sole question is whether
Congress can subpoena documents in the hands of a liti-
gant in a Federal Court proceeding from that litigant
who would not otherwise have them except for the dis-
covery procedures of the Federal Courts when there has
been no showing of extraordinary circumstances.
The Court has reached the conclusion that the motion
of the Subcommittees must be denied.
The Federal Courts and the Congress have two different
roles under our Constitution. Congress has the power
and responsibility to enact legislation under its enumerated
powers and the “necessary and proper clause” of the
Constitution.? The Federal Courts have the power to hear
all cases and controversies arising under the Constitution
and laws of the United States.* Congress has the power
? Article I, Section 8.
* Constitution. Article III. Marbury v. Madison, 5 U.S
133, 2 L.Ed. 60 (1803).
eee
=) i
to circumscribe the jurisdiction of the various Federal
Courts‘ and may pass laws which regulate the procedures
in the Federal Courts® but has not the power to interfere
in a particular case.
The Fifth Amendment to the Constitution states in
part: “.. . nor be deprived of life, liberty, or property,
without due process of law, ....” Due process must entail
the hearing of a case by a Federal Court without the
interference of one of the other branches of the Govern-
ment.°®
In the instance before the Court now, the persons whom
the Subcommtttees have subpoenaed would not have
possession of the subpoenaed documents but for the dis-
covery rules of the Federal Courts. Congress by sub-
poenaing these documents is interfering with the processes
of a Federal Court in an individual case.’ Had not a pro-
tective order been in force covering the documents, the
Court would have entertained a motion for one.
Whether or not Messrs. Freie, Hawkins and Cochrane
should have turned over any other documents to the Sub-
committees given to them as a result of the discovery
processes of this Court has not been presented to this
Court and is probably a matter more of form than of
substance since the other documents, not being covered
by a protective order, have been spread upon the public
record in the files of the Clerk of this Court.
* Tbid.
_ * Wayman v. Southard, 23 U.S. 1, 6 L.Ed. 1 (1825).
in a particular case.
ap hata v. Thompson, 103 U.S. 168, 26 L.Ed. 377
"The Subcommittees have not based their motion on
any extraordinary need for these items to be subpoenaed
from these individuals, so the question of extraordinary
circumstances as a justification for the subpoena will be
ignored by the Court.
—Y =
For the reasons stated the motion of the Subcommittees
for clarification or modification of this Court’s protective
order is denied. Defendants’ attorneys are requested to
prepare and submit appropriate form of order.
/s/ W. M. Taylor Jr.
United States District Judge
Aug. 17, 1978
Date
APPENDIX
THE COURT: Well, gentlemen, I can appreciate Mr.
Hawkins and Mr. Cochrane’s discomfort. Mr. Hawkins
said something about somebody serving his time if found
in contempt of Congress. I wonder if he wants to trade
places with me and decide one of these, what appears
to be a confrontation between Congress and the Judiciary,
in connection with the Judiciary the responsibility to ad-
minister justice.
Now it appears to me, I may oversimplify the matter,
it appears to me that Congressman Moss’ committee is
relying upon Eastland versus United States Servicemen’s
Fund and Judge Hart’s opinion in the Gulf case, and
apparently the committee thinks that that case gave Con-
gress carte blanche to do anything that it wanted to do
free from any review by the Courts.
Now throughout all of these cases that I have read
and have been cited in these briefs, that is those cited
in the briefs that I have been able in that time to read,
it is consistently held that resolutions, subpoenas, even
statutes enacted by Congress are subject to review and
who but the Courts can exercise that power to review.
Doesn’t that go back to Marbury versus Madison or some
such case as that, but in any event the Eastland case by
the Supreme Court did not involve a court order, that is a
a "
court order, protective order as in this case. There the
Court was saying simply that members of Congress are
free, as I read the case, are free from interference by
being hailed into Court in connection with their activities
in their Congressional duties. It is inconceivable to me
that Congress would or a committee of Congress would
just run roughshod over an order of Court entered in
connection with the disposition or trial or preparation
of a case pending in Court. I just can’t believe that Con-
gress would undertake to do that or would do it. And it’s
also a little difficult for me to believe that the Justice
Department would pursue a contempt matter, a contempt
of Congress matter where lawyers in the position that
Mr. Hawkins and Mr. Cochrane are, being under an order
of this Court not to divulge this information. The informa-
tion Congress seeks is available elsewhere and as I under-
stand the record subpoenas have been issued for that pur-
pose to acquire the information from some other source.
I just cannot — Well, I don’t think it would be proper
for this Court under these circumstances where this Court
has entered a protective order, just because Congress
wants to get all of the information that some of the lawyers
have, just step aside and say, “Well, go right ahead.”
I think the orders of a Federal Court in its undertaking
to dispose of cases, of lawsuits, have some significance
and some importance. I’m going to deny the motion to
modify or amend the order.
As I said, I understand the uncomfortable position
that Mr. Hawkins and Mr. Cochrane may be in, but I
think the order of this Court and this matter is important
enough that it should be maintained and not set aside
or modified.
Now, it was suggested that the committee should be
before the Court. Of course, the Court is not going to
subpoena the committee to come down and defend itself
or anything of that kind. One of the counsel did call Mr.
Purdy, my law clerk, about the matter,
—B6—
Now, this order of mine refusing to. amend or correct
the protective order or relieve Mr. Hawkins of the effect
of that order, of course, is without prejudice to the right
of the committee and its counsel might well work out a
confidential order or. an agreement with the parties at
interest here. So, I am going to deny the motion and, so
to speak, let the chips fall where they may.
— = eee eee
a RF
In Toe Unirep States Court Or APpPEALs
For The Fifth Circuit
PUBLISH
No. 78-3344
In Re: Beer Inpustry Antitrust LITIGATION,
Neau Sirs, Er Au.,
Plaintiffs-A ppellants,
versus
Tue Nationau Provisioner, Inc., Er Au,
Defendants-Appellees.
Appeal from the United States District Court for the
Northern District of Texas
(Fesruary 2, 1979)
Before THornserry, Fay and Rusin, Circuit Judges.
Rusin, Circuit Judge:
The chairmen of two subcommittees of the House of
Representatives and the Clerk of the House’ seek to inter-
vene in an antitrust suit pending in district court among
private litigants in order to gain access to documents
subpoenaed by the subcommittees from a party to the
litigation. The documents were obtained by the subpeonaed
party through discovery. Because the district court refused
to modify its standing protective order or to allow the
representatives of the party under subpoena to comply,
* Congressman Neal Smith is the Chairman of the Sub-
committee on SBA and SBIC Authority and General
Small Business Problems of the Committee on Small
Business. Congressman John E. Moss is Chairman of the
Subcommittee on Oversight and Investigations of the
Committee on Interstate and Foreign Commerce. Hon.
Edmund L. Henshaw, Jr. is the Clerk of the House. His
interest in the case is not apparent from the briefs. But
see Rule III (3), Rules of the House of Representatives
for the 95th Congress, H.R. Doc. No. 94-663, 94th Cong.,
2d Sess. (1977) (Clerk to affix the seal of the House to
all subpoenas.)
=
the chairmen have appealed to this court. On a motion
to dismiss, we must consider whether the action is prop-
erly before us.
There can be no doubt that the privilege of confiden-
tiality, now embodied in Rule 26(c), Federal Rules of
Civil Procedure, is a creation of Congress, just as are
the rules relative to the procedure for obtaining subpoenas,
e.g., F.R.C.P. 45, and for intervention in pending lawsuits,
F.R.C.P. 24. See 28 U.S.C. § 2071. The issue before us
does not relate to the power of Congress but to whether
Congress has acted. Cf. United States v. Gustin-Bacon
Division, Certain-Teed Products Corp., 10 Cir. 1970, 426
F.2d 539, 542, cert. denied, 400 U.S. 832, 91 S.Ct. 63, 27
L.Ed.2d 63. It is respect for the duties and power of
Congress, as set forth in Article I of the Constitution,
that requires us to inquire whether Congress has au-
thorized what these congressmen, as chairmen of their
respective subcommittees, seek to do. Congressional com-
mittees are themselves the offspring of Congress; they
have only those powers authorized by law; they do not
have an unlimited roving commission merely by virtue
of their creation and existence to ferret out evil or to un-
cover inequity. If Congress as a whole has created a
privilege, then it is the duty of the court to protect it
against violation even by a committee of that Congress.
Such judicial action manifests respect for the law-making
authority of the legislative branch of the government,
not a lack of cooperation with its investigative efforts.
The appeal is related to a pending private antitrust
suit, In re Beef Industry Antitrust Litigation (N.D. Tex.,
M.D.L. No. 248). In October 1976, the district court issued
an extensive protective order based on Rule 26(c), F.R.
C.P. The order allows documents and deposition testimony
to be designated as confidential, and provides in part:
Any information designated as confidential informa-
tion shall not be made available to persons other than
qualified persons or the party who produced the confi-
dential information,
in ve es
—B-9 —
An exception is made if the court orders disclosure, or
if the party designating the information as confidential
consents to disclosure.
Two subcommittees of the House of Representatives,
the Subcommittee on Oversight and Investigations of the
Committee on Interstate and Foreign Commerce, and the
Subcommittee on SBA and SBIC Authority and General
Small Business Problems of the Committee on Small
Business, learned of the existence of the antitrust suit
in the course of investigating the domestic beef industry.
Each of the subcommittees issued subpoenas to attorneys
representing one of the plaintiffs, the Meat Price Investi-
gators Association, and to an officer of the Association,
demanding documentary material obtained by MPIA from
other parties during the course of discovery in the anti-
trust suit. Te validity of the subpoenas was not chal-
lenged; however, because some of the material requested
by the subcommittees was subject to the district court’s
protective order, MPIA moved for the court’s permission
to comply with the congressional subpoenas. The court
denied pernaission, but without prejudice to the right of
the subcommittees to ask for relief on their own behalf.
The chairmen of the two subcommittees did not seek to
intervene in the suit; instead they sought leave to file a
motion to grant MPIA’s request, or for clarification or
modification of the protective order. The court allowed
the motion to be filed, but denied the relief requested.
The two chairman then appealed the trial court’s denial
of their motion. No party to the litigation joined in the
appeal.
Before assessing the respective positions of the litigants,
it is appropriate to consider the effect of the chairmen’s
failure to comply with the procedure for intervention
established by Rule 24(c), F.R.C.P.2 Some courts have held
* This issue was not discussed by the parties; however,
we consider it of sufficient importance to raise sua sponte.
See SEC v. Lincoln Thrift Ass’n., 9 Cir. 1978, 577 F.2d
600, 602.
— B-10 —
that it is reversible error to conduct any proceedings
at the behest of parties who ~~ “ue : ———
formally pursuant to Rule 24(c). E.g., Spangler v. rasa-
dena City Board of Education, 9 Cir. 1977, 552 F.2d 1326.
See also Moten v. Bricklayers, Masons and Plasterers
International Union, D.C. Cir. 1976, 543 F.2d 224. Other
courts have been willing to ignore technical defects in the
intervention process. E.g., United States v. Louisiana, 5
Cir. 1976, 543 F.2d 1125; Smartt v. Coca-Cola Bottling
Corp., 6 Cir., 1964, 337 F.2d 950, cert. denied, 1965, 380
U.S. 934, 85 S.Ct. 941, 13 L.Ed.2d 822. Occasionally,
courts have been willing to overlook a total failure to
comply with Rule 24(c). E.g., SEC v. Lincoln Thrift Asso-
ciation, 9 Cir. 1978, 577 F.2d 600; Roach v Churchman,
8 Cir. 1972, 457 F.2d 1101.
The Fifth Circuit has been lenient in hearing the
appeals of non-parties. In Overby v. United States Fidelity
and Guaranty Co., 5 Cir. 1955, 224 F.2d 158, 162, we
allowed the Acting Secretary of the Treasury, “whether
or not he was formally recognized as a party to the suit,”
to appeal an order requiring the production of bank
records in the bank’s suit against its surety company
because the Secretary had asserted that the records were
privileged. A few years later, in Caswell v. Manhattan
Fire & Marine Insurance Co., 5 Cir. 1968, 399 F.2d 417,
we held that a nonparty could appeal the denial of his
motion to quash a subpoena. Finally, in United States
v. United Fruit Co., 5 Cir. 1969, 410 F.2d 553, cert. denied,
396 U.S. 820, 90 S.Ct. 59, 24 L.Ed.2d 71, we allowed a
nonparty to appeal the denial of its motion for permission
to inspect and copy progress reports and programs sealed
under a protective order. Although the panel considered
whether it had jurisdiction over the case, it did not ex-
amine whether the nonparty had any right to file a motion
with the district court, or to appeal without complying
with Rule 24(c).
‘There is no question that the procedurally correct course
for the chairmen would have been first to obtain status
ore wee Ee SaaS rm BB St
a
— B-11 —
in the suits as intervenors. See SEC v. Lincoln Thrift
Association, supra, 577 F.2d at 603. However, we note that
the district court denied the plaintiffs’ motion for leave
to comply with the congressional subpoenas, “without
prejudice to the right of the Committee and its counsel
to appear before this court and ask for the relief that it
seeks.” This could be construed as an invitation to the
chairmen to file their motion without first seeking formal
intervention; indeed, the appellees use the words “per-
mitted to intervene’’ when referring to the appellants’
status in the motion to dismiss. See West v. Radio-Keith-
Orpheum Corp., 2 Cir. 1934, 70 F.2d 621, 624, cited in SEC
v. Lincoln Thrift Association, swpra, 577 F.2d at 602
(creditors had standing because they were “brought in in
invitum”). Compare United States v. United Fruit Co.,
supra, 410 F.2d at 554 (“The [protective] order provided
that third parties could not, without an express order of
the court inspect or copy any document submitted. . . .”);
Roach v. Churchman, supra, 457 F.2d at 1104 (affording
relief to a participant without formally naming it as a
party deemed “equivalent to authorizing” intervention).
In view of our lenience in the past and the fact that the
district court’s acts might be considered equivalent to
authorizing intervention, we will not dismiss for the failure
to comply with Rule 24(c), but we will assume that the
district court implicitly authorized the chairmen to inter-
vene. However, we reiterate that a formal motion for
intervention should have been filed pursuant to Rule
24(c). Future litigants should not attempt to use this
opinion to circumvent the clear requirements of the rule.
We now turn our attention to the issues raised by the
litigants.
In response to the appeal filed by the chairmen, one of
the defendants, The National Provisioner, Inc., filed a
motion to dismiss because neither subcommittee had ob-
tained authorization from the House of Representatives
before it sought to file the motion in the district court;
we note ourselves that neither has obtained authority
— B-13—
to appeal. The premise of the motion to dismiss is that
authorization is required by Rule XI, cl. 2(m)(2)(B)
of the Rules of the House of Representatives for the
95th Congress, H.R. Doc. No. 94-663, 94th Cong., 2d Sess.
(1977), before a congressman may appear in court on
behalf of a committee or subcommittee; that rule provides:
Compliance with any subpena [sic] issued by a com-
mittee or subcommittee ... may be enforced only as
authorized or directed by the House.
The position of the chairmen is that authorization under
this rule is not required both because they seek modifica-
tion of a court order rather than judicial enforcement
of a congressional subpoena and also because they do
not desire to retain outside counsel to represent their
subcommittees in court. However, they point to no other
rule and to no statute that confers general authority
to prosecute or intervene in law suits or undertake other
actions in the courts.
While the opinion of two congressmen on the applica-
bility of a rule of the House is certainly entitled to serious
consideration by this court, we note that legislative com-
mittees and congressmen have been held to observance
of the rules of Congress and that those rules are judicially
cognizable. Yellin v. United States, 1963, 374 U.S. 109,
114, 83 S.Ct. 1828, 1832, 10 L.Ed.2d 778, ........ . See also
Christoffel v. United States, 1949, 338 U.S. 84, 69 S.Ct.
1447, 93 L.Ed. 1826. In interpreting the meaning and
scope of the House rule, it is appropriate to examine
congressional practice under that rule. See Yellin v. United
States, 374 U.S. at 116-17, 83 S.Ct. at 1833, 10 L.Ed.2d
DE scsi
One of the chairmen before us, Representative John
E. Moss, has previously intervened on behalf of the
Subcommittee on Oversight and Investigations in a then-
pending case, Ashland Oil, Inc. v. FTC, D.D.C. 1976, 409
F.Supp. 297, aff'd, D.C. Cir. 548 F.2d 977 (per curiam).
— B-13 —
That case arose when Ashland Oil sought to enjoin the
Federal Trade Commission from transferring secret in-
formation obtained from Ashland (apparently not in the
course of litigation) to the Subcommittee on Oversight and’
Investigation of the Committee on Interstate and Foreign
Commerce at the request of Subcommittee Chairman Moss.
A week after Ashland Oil obtained a temporary restrain-
ing order, the subcommittee authorized a subpoena for
the documents. 7d. at 301. On the same day, Congressman
Moss filed a resolution for authorization from the House
to intervene with special counsel in the suit that Ashland
Oil had filed seeking to enjoin the FTC from transferring.
the documents to the subcommittee? H. R. Res. 899, 94th
Cong., Ist Sess. (1975). See 121 Cong. Rec. 38213.
The resolution passed by the House authorized Con-
gressman Moss to “intervene and appear” in the pending
action in district court on behalf of the committee. The
report accompanying the resolution, H. R. Rep. No. 94-756,
explained why the resolution was necessary. It noted, “The
Supreme Court has ruled that a committee (or subcom-
mittee) must have specific authority from the appropriate
House in order to undertake any court action. Reed v.
County Commissioners, 277 U.S. 376 (1928).’* (Emphasis
* Rule XI, cl. 2 (m)(2)(B) of the Rules ef the House
of Representatives for the 94th Congress, H. R. Doc. No.
93-416, 93d Cong., 2d Sess. (1975) is identical to the
previously quoted rule of the 95th Congress.
*In Reed v. County Commissioners, 1928, 277 U.S. 376,
48 S.Ct. 531, 72 L.Ed. 924, the Supreme Court dismissed
a suit brought to compel the production of documents
because the members of the committee were not specifically
authorized by the Senate to bring suit. Specific authoriza-
tion has also been required in the context of prosecutions
for contempt of Congress. Cf. Gojack v. United States,
1966, 384 U.S. 702, 716, 86 S.Ct. 1689, 1698, 16 L.Ed.2d
870, ........ (“the line of authority from the House to the
Committee and then to the subcommittee must plainly
and explicitly appear”).
— B-14—
supplied.) H. R. Rep. No. 94-756 at 22. The resolution
was approved with unanimous consent. 121 Cong. Ree.
41707 (1975). After obtaining authorization, Congressman
Moss sought and was granted leave to intervene in the suit
pursuant to F.R.C.P. 24(a). 409 F. Supp. at 301.
In Ashland Oil, Congressman Moss was not seeking to
obtain judicial enforcement of a congressional subpoena;
he intervened to obtain the dissolution of the temporary
restraining order that prevented the FTC from sending
requested documents to his committee, and to oppose any
temporary or permanent injunction that Ashland Oil might
have sought to prevent the transfer of the documents
for a longer period. Moreover, although special counsel
was authorized in H. R. Res. 899, that was not the sole
purpose of the resolution; it is clear that the resolution
was submitted and passed because the Congressman him-
self stated that he needed such authorization. See, e.g.,
H. R. Rep. No. 94-756 at 20-21. Neither the resolution
nor the accompanying report provide any basis to support
the view that under the House rules authorization is re-
quired only when special counsel is to be retained.
Thus based on the practice in the House of Representa-
tives, as revealed by Congressman Moss’s actions in the
_ Ashland Oil case, it is apparent that Rule XT, cl. 2(m)
(2)(B) requires House authorization not only for direct
enforcement of a subpoena but also in any instance when
a House committee seeks to institute or to intervene in
litigation and, of course, to appeal from a court decision,
particularly when the purpose is, as here, to obtain the
effectuation of a subpoena. Congressmen Smith and Moss
failed to obtain a House resolution or any other similar
authority before they sought to intervene in the beef
industry case. If every subcommittee of the Congress is
to have inherent authority to intervene in pending suits,
to file motions in litigation throughout the nation and
to prosecute appeals from district court decisions, a gen-
— B-15 —
eral grant of authority by statute or resolution would
appear appropriate. In the absence either of such a gen-
eral authorization or specific authorization for the actions
here taken, the motion to dismiss the appeal is granted.°
*In view of our disposition of the case, we need not
consider, sua sponte, the question of the mootness of the
congressional subpoenas. Since the 95th Congress has
adjourned, the subpoenas may no longer be in force. See
Eastland v. United States Servicemen’s Fund, 1975, 421
U.S. 491, 512, 95 S.Ct. 1813, 1826, 44 L.Ed.2d 324,
siinieati Neither need we consider the validity of the tech-
nical objection that, in filing the appeal, the chairmen
appeared to act individually and not in their official
capacities on behalf of their committees. For the purpose
of this opinion, we have assumed, without deciding, that
Congressmen Smith and Moss are acting on behalf of
their respective committees,
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.