Opinion
Case No. 01-2583-JAR
February 19, 2003
MEMORANDUM AND ORDER
Pending before the Court is defendant William D. Cox's Motion to Compel Discovery (doc. 96). Pursuant to Fed.R.Civ.P. 37(a)(2)(A), defendant Cox requests that the Court compel Plaintiff to provide unredacted documents responsive to his First Request for Production of Documents requests numbered 38, 40-49 and 51-58. Plaintiff opposes the motion, arguing that the redacted identities of the TransFinancial Shareholders Association ("TSA") subscribers should not be disclosed based upon the confidentiality provisions of the TSA Subscription Agreements. Plaintiff also attempts to invoke the qualified journalist's privilege by arguing that TSA qualifies as a member of the press and the redacted identities qualify for protection from disclosure. For the reasons stated below, defendant Cox's Motion to Compel Discovery shall be granted.
I. Background
This case involves Plaintiff, as a shareholder of TransFinancial Holdings, Inc. ("TransFinancial"), seeking to assert derivative causes of action concerning the liquidation sale of assets by Crouse Cartage Company, a subsidiary of TransFinancial, to RLR Investments and R L Transfer. During discovery, individual defendant Cox served his First Request for Production of Documents on Plaintiff, which requested production of documents relating to communications between TSA and various individuals. TSA is a group of TransFinancial shareholders who agreed to the terms of a uniform Subscription Agreement and whose purpose is to disseminate information about TransFinancial to its shareholder subscribers. In response to defendant Cox's First Request for Production, Plaintiff, a former TSA representative, produced copies of two Subscription Agreements that were in his possession. Prior to producing the two TSA Subscription Agreements in his possession, he redacted the subscribers' identities from the documents and asserted an objection to requests numbered 38, 40-49, and 51-58 on the basis that they sought information protected by TSA's Subscription Agreement confidentiality clause. After attempting to confer with Plaintiff to resolve the issue without court action, as required by Fed.R.Civ.P. 37(a)(2)(A) and D. Kan. Rule 37.2, defendant Cox filed the instant motion to compel.
II. Discussion
A. Confidentiality objection
Plaintiff first argues that he should not be required to disclose the identity of the TSA subscribers because that information is protected by a confidentiality agreement contained in TSA's Subscription Agreement.
Paragraph 4 of the TSA's Subscription Agreement provides that:
Confidential Information: It is understood that any information obtained by Subscriber as a result of association with the Association is intended for independent use by Subscribers in the evaluation of the investment decisions. Subscribers will respect the private, proprietary, or privileged nature of any non-public information, including but not limited to the identities or views of other subscribers, and advice provided by the Association's Advisor or legal Counsel. Subscriber will not disclose any confidential information without the written consent of Representative. To the extent that Subscriber may be required to disclose confidential information to comply with regulations or legal proceedings, Subscriber will promptly inform Association's Legal Counsel of any such demands, and will reasonably cooperate with any Association effort to contest or otherwise protect the interests in confidentiality. The confidentiality objections will survive termination of the Agreement.
Defendant Cox contends that because Plaintiff does not claim the information is privileged, it is therefore discoverable.
It is well settled in this District that confidentiality is generally not grounds to withhold information from discovery. "Confidentiality does not equate to privilege." Plaintiff's contractual, legal obligation as a subscriber of TSA not to reveal confidential information of other subscribers is not a valid basis for withholding information in this litigation.
Mike v. Dymon, Inc., No. Civ. A. 95-2405-EEO, 1996 WL 606362, at *3 (D.Kan. Oct. 17, 1996).
Stewart v. Mitchell Transport, No. Civ. A. 01-2546-JWL, 2002 WL 1558210 (D.Kan., July 8, 2002) (quoting Hill v. Dillard's, Inc., No. 00-2523-JWL, 2001 WL 1718367, *4 (D.Kan. Oct. 9, 2001)); see also Federal Open Mkt. Comm. v. Merrill, 443 U.S. 340, 362 (1979) ("there is no absolute privilege for trade secrets and similar confidential information").
Moveover, the confidentiality clause contained the Subscription Agreement itself provides that subscribers may be required to disclose confidential information "to comply with regulations or legal proceedings." The confidentiality provision clearly contemplates disclosure in this context.
Accordingly, Plaintiff's assertion that discovery of the TSA subscribers' identities seeks confidential information is not a sufficient reason to withhold this information from discovery. Plaintiff's confidentiality concerns can be adequately addressed by the parties' Agreed Protective Order already on file in this case. The Court, therefore, overrules Plaintiff's confidentiality objection.
B. Qualified journalist's privilege objection
Plaintiff also contends that the Court should not order disclosure of the subscribers' identities because the TSA is an organization that expresses opinions on public matters and, as such, qualifies for limited protection from disclosure of its sources as a member of the press. Plaintiff urges the Court to protect the identities of various TSA shareholder members by finding TSA to be a qualified organization to assert a qualified journalist's privilege. In response, defendant Cox asserts that no first amendment interests are at stake in this case because he is not seeking the identity of "sources" of information distributed to subscribers of the TSA. He argues that the case principally relied upon by Plaintiff, In re Scott Paper Co. Sec. Litig., which held that Standard Poor's, a business credit-rating company, was entitled to invoke the journalist's privilege under the First Amendment, has no application to this case.
145 F.R.D. 366 (E.D.Pa. 1992).
Contrary to Plaintiff's assertion that he should be entitled to invoke the qualified journalist's privilege to protect the identities of the TSA subscribers, the Court determines that Plaintiff has not demonstrated that the TSA subscribers whose identities were redacted were the source of any information Plaintiff or TSA intended to disseminate to the public. No evidence exists that the redacted subscribers provided any information other than their name on the produced Subscription Agreements, or were acting as sources of any information that TSA or Plaintiff, as TSA's representative, intended to disseminate to the public. Because Plaintiff has not established that the TSA subscribers' identities at issue are "sources" of information intended to be disseminated to the public, Plaintiff is not entitled to invoke the journalist's privilege to prevent discovery into the identities of the TSA subscribers. Plaintiff's objection to producing documents containing TSA subscribers' identities on the basis of a qualified journalist's privilege is overruled.
See von Bulow by Auersperg v. von Bulow, 811 F.2d 136, 145 (2d Cir.), cert. denied, 481 U.S. 1015 (1987) ("The primary relationship between the one seeking to invoke the privilege and his sources must have as its basis the intent to disseminate the information to the public garnered from that relationship.")
III. Conclusion
For the reasons set forth above, the Court hereby grants William D. Cox's Motion to Compel Discovery (doc. 96). Within ten (10) days of the date of the filing of this Order, Plaintiff shall provide unredacted copies of the documents responsive to defendant Cox's First Request for Production on Plaintiff requests numbered 38, 40-49 and 51-58. This information shall be produced subject to the provisions of the parties' Agreed Protective Order (doc. 69) already on file in this case.
IT IS SO ORDERED.