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In re Coordinated Pretrial Proceedings

decided: May 18, 1982.


Appeal from an order of contempt imposed by the United States District Court for the Southern District of New York, Gray, J.,*fn* on non-party witness McGraw-Hill, Inc. for refusing to comply with an order requiring disclosure of the names of confidential sources. Vacated and remanded.

Before Friendly, Kaufman and Pierce, Circuit Judges.

Author: Per Curiam

This is an appeal from Judge William P. Gray's order*fn1 holding McGraw-Hill, Inc. in civil contempt for refusing to produce a document in the possession of Ernest McClelland, an employee of McGraw-Hill, containing certain names of confidential sources. The document was requested pursuant to a subpoena duces tecum served on McGraw-Hill as a non-party witness by the States of Arizona, California, Florida, Oregon and Washington ("States") in connection with a multidistrict litigation brought against seventeen oil companies alleging violations of the Sherman Act, 15 U.S.C. ยง 1. Because the law regarding the qualified privilege of reporters as it applies in this case is relatively clear, there is no need for us to engage in an elaborate exegesis at this time. Since we believe that under controlling case law the record before us does not support a requirement that McGraw-Hill reveal the names of confidential sources, we vacate and remand the case to the district court.

A brief review of the underlying litigation will place our analysis of Judge Gray's order in context and will demonstrate the inadequacy of the States' showing of a need for disclosure. The States filed suits against seventeen oil companies seeking treble damages for numerous violations of the antitrust laws.*fn2 The allegation relevant to this appeal is their contention that the oil companies engaged in a conspiracy to fix the prices of refined oil products, especially retail gasoline. Believing that the conspiracy may have been facilitated by communications to and from trade publications, the States on May 1, 1980 caused a subpoena duces tecum to be served upon Platt's Oilgram Price Service, a division of McGraw-Hill, Inc. The Service published Platt's Oilgram Price Report*fn3 ("Platt's"). The subpoena required production of any document referring to communications concerning petroleum products prices for the period 1970-73.*fn4 McGraw-Hill did not fully comply with the subpoena. Invoking the privilege from disclosure afforded reporters, McGraw-Hill declined to produce certain documents which contained the names of confidential sources of information.*fn5

Judge Gray held a hearing on December 3, 1981 and concluded that the interest of the States in the names of the confidential sources outweighed the First Amendment right of McGraw-Hill.*fn6 Accordingly, he ordered that the names be disclosed.*fn7 When McGraw-Hill persisted in its refusal to reveal the names maintained by Platt's editor Ernest McClelland, Judge Gray imposed a fine of $100 per day on McGraw-Hill for civil contempt.*fn8 This appeal followed.

The law in this Circuit is clear that to protect the important interests of reporters and the public in preserving the confidentiality of journalists' sources, disclosure may be ordered only upon a clear and specific showing that the information is: highly material and relevant, necessary or critical to the maintenance of the claim, and not obtainable from other available sources. Baker v. F & F Investment, 470 F.2d 778, 783-85 (2d Cir. 1972), cert. denied, 411 U.S. 966, 93 S. Ct. 2147, 36 L. Ed. 2d 686 (1973). Accord, Zerilli v. Smith, 211 U.S. App. D.C. 116, 656 F.2d 705, 713-15 (D.C.Cir.1981); Silkwood v. Kerr-McGee Corp., 563 F.2d 433, 438 (10th Cir. 1977). Upon careful review of the record, we are convinced that there was an insufficient basis for ordering identification of the confidential sources.

In Branzburg v. Hayes, 408 U.S. 665, 92 S. Ct. 2646, 33 L. Ed. 2d 626 (1972), the Supreme Court held that reporters do not possess a blanket exemption from testifying before a grand jury. In his concurring opinion, however, Justice Powell*fn9 emphasized the limited nature of the Court's holding, and stated that:

if the newsman is called upon to give information bearing only a remote and tenuous relationship to the subject of the investigation, or if he has some other reason to believe that his testimony implicates confidential source relationships without a legitimate need of law enforcement, he will have access to the court on a motion to quash and an appropriate protective order may be entered.

Id. at 710, 92 S. Ct. at 2671. The names of the confidential sources sought in this instance bear at most a tenuous and speculative relationship to their antitrust claims.

The States argue that oil companies may have transmitted price information among themselves by releasing that data to reporters of Platt's. We find no such allegation, however, in their complaints. Rather, the pleadings suggest that the purportedly unlawful communications were directly accomplished through secret telephone lines, unlogged calls and surreptitious meetings. This critical omission is compounded by the complete failure of the States to present any evidence indicating that the involvement of Platt's in fact occurred. Judge Gray acknowledged the absence of proof that the sources possessed relevant information: "Now I hasten to add I certainly don't know whether any such exchanges took place. I have no information on that whatever." The necessity for confidentiality, essential to fulfillment of the pivotal function of reporters to collect information for public dissemination, cannot be overcome simply by suggesting-with no basis to support the assertion-that the reporter may unknowingly have been used by those sources in their illegal activities.*fn10

Disclosure was also improperly ordered because the States failed to carry their burden of first seeking the information elsewhere. In Branzburg v. Hayes, supra, Justice White, writing for the Court, noted that the Attorney General of the United States had fashioned a set of rules for federal officials in connection with subpoenaing members of the press to testify before grand juries. Id. at 706-07, 92 S. Ct. at 2669. The Guidelines for Subpoenas to the News Media, expressed in Department of Justice Memo. No. 692 (Sept. 2, 1970), contained the admonition that "all reasonable attempts should be made to obtain information from non-press sources before there is any consideration of subpoenaing the press." Id. at 707, 92 S. Ct. at 2669.

In Baker v. F & F Investment, supra, we affirmed the district court's refusal to order a journalist to reveal the name of a "blockbuster" whom he had interviewed while preparing a Saturday Evening Post article on housing discrimination because the plaintiffs had not exhausted other available sources of the information. Similarly, in this case, the States have failed to explore any alternative means of discovering whether the oil companies used Platt's as part of their purported price fixing conspiracy. While hundreds of depositions have already been taken, there is no indication that anyone was asked the simple question "Have you ever communicated pricing information to Platt's?" Additional depositions may be necessary to uncover whether Platt's played any role in the alleged antitrust conspiracy. See also note 10, supra. This requirement is reasonable when balanced against the strain on the First Amendment which the contempt order imposes.*fn11 In the process, if the States learn that their theory is correct, they may also identify the actual purveyors of price information, thus obviating the need to inquire of Platt's.

The States invite us to disregard these established principles and permit compelled disclosure of confidential sources in the absence of this constitutionally mandated showing simply because the underlying litigation involves the antitrust laws. We decline the invitation to hold violations of the antitrust laws to be sui generis. Although it is true that the Sherman Act represents Congress's strong commitment to fostering a competitive marketplace, enactment of a statute cannot defeat a constitutional provision. In Baker v. F & F Investment, supra, we recognized the strong public policy embodied in the federal civil rights laws but rejected a similar plea to alter the constitutional test, explaining "(i)t would be inappropriate for a court to pick and choose in such gross fashion between different acts of Congressional legislation, labeling one "exceedingly important' and another less so, without specific directions from the Legislature." Id. at 783. We do not believe that the antitrust laws should receive a preferred position in this context and, accordingly, refuse to depart from the accepted test expounded in Baker. Indeed, this case presents a less compelling argument for disclosure than in Branzburg v. Hayes, supra, because we are dealing with a civil action rather than questioning by a grand jury.*fn12

Accordingly, we conclude that Judge Gray improperly imposed civil contempt sanctions upon McGraw-Hill in the absence of concrete evidence that the information sought was relevant to the underlying antitrust action and could not be obtained ...

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