EDUC v. Nat'l Collegiate

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-3495
UNITED STATES DEPARTMENT OF EDUCATION,
Plaintiff-Appellee,
v.
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:06-CV-01333—John Daniel Tinder, Judge.
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ARGUED FEBRUARY 23, 2007—DECIDED MARCH 21, 2007
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Before POSNER, KANNE, and ROVNER, Circuit Judges.
POSNER, Circuit Judge. The University of the District of
Columbia is a member of the National Collegiate Athletic
Association, and as such subject to its rules. A violation of
an NCAA rule can impose heavy costs should it result in
the imposition of sanctions on the violator. Typical sanc-
tions, such as banning the violator from postseason compe-
tition or reducing its athletic scholarships, make a
school less successful in postseason play, upon which the
school’s share of the television and other media revenues
2 No. 06-3495
that the NCAA obtains and doles out to its members
primarily depends.
Member schools can minimize their punishment, how-
ever, by reporting their violations to the Association before
it discovers them. UDC did this, reporting violations
involving its basketball teams in the 2004-2005 season. The
exact nature of the violations is unclear, but they seem to
have included misuse of federal funds, and the Inspector
General of the Department of Education began an investi-
gation of that misuse. In the course of the investigation the
Department issued a subpoena to the NCAA for docu-
ments that UDC had submitted, or the Association had
prepared, in connection with the Association’s investiga-
tion of UDC’s self-reported violations. The Association
moved to quash the subpoena or in the alternative for
the protective order described below. The district court
denied the motion; the Association appeals only from the
denial of the protective order.
The Association acknowledges that compliance with the
subpoena is not burdensome in the sense of imposing
heavy costs of identifying, locating, copying, or transport-
ing the documents to the Department of Education, that
the documents sought are relevant to the Department’s
investigation, and that the Department is authorized by
law to conduct such an investigation. But the Association
argues that if the government can make unrestricted use of
documents submitted to the Association in aid of the
Association’s own investigations, this will impede those
investigations because whistleblowers will worry that if
they inform to the Association their cover will be blown.
This amounts to arguing that a private organization should
have the right to impede government investigations
because it wants to conduct its own investigations without
No. 06-3495 3
hindrance. To state the proposition is almost enough to
refute it.
Of course there are privileges that can be used to keep
information from government agencies and thus impede
government investigations, such as the lawyer-client
privilege. But there is no private-investigator’s privilege.
The lawyer-client privilege can embrace a lawyer’s agents
(including an investigator), for example when “the client
in the first instance consults a lawyer who retains an
accountant as a listening post.” United States v. Kovel, 296
F.2d 918, 922 (2d Cir. 1961) (Friendly, J.); see also United
States. v. Haynes, 216 F.3d 789, 793-94, 798 (9th Cir. 2000);
United States v. Alfonso, 552 F.2d 605, 617 (5th Cir. 1977);
Parkman v. Arkansas, 742 S.W.2d 927, 928-29 (Ark. 1988);
Flynn v. Superior Court, 57 Cal. App. 4th 990, 992-96 (1997);
cf. United States v. Nobles, 422 U.S. 225, 237-39 (1975) (work
product). But there is nothing like that in this case.
There isn’t even a reporter’s privilege in federal cases.
Branzburg v. Hayes, 408 U.S. 665 (1972); University of
Pennsylvania v. EEOC, 493 U.S. 182, 201 (1990); McKevitt v.
Pallasch, 339 F.3d 530 (7th Cir. 2003). The news media
conduct investigations, and their ability to do so would be
enhanced if they were permitted to conceal the identity of
their sources from the government. But they are not.
So the NCAA has trimmed its sails, asserting in this
appeal a right not to withhold documents from the govern-
ment but instead to a protective order that will forbid the
Department to show them to anyone without five days’
advanced notice to the Association. During that cooling-off
period the Association would go to the intended recipient
of the documents (whom the Department would have to
identify to the Association) and ask him to keep any
sensitive information in the documents confidential. If he
4 No. 06-3495
refused or was unable to give adequate assurance of
confidentiality, the NCAA would have a right to ask the
court for a further protective order, of indefinite length,
against the Department’s turning over the documents.
That further order would be enforcing a privilege
under a different name; the government would have
physical possession of the documents but its ability to use
them would be severely limited. Even the five-day cooling-
off period would hamper the government’s investigation
because of the NCAA’s implied threat to sue any intended
recipient of documents if he refused to play ball with the
Association. Imagine if the Department of Education
intended to give documents that it had obtained from the
NCAA to a Justice Department prosecutor for presentation
to a grand jury. If the prosecutor decided to submit them to
a grand jury over the Association’s protests, the Associa-
tion would bring suit to enjoin the submission. The suit,
whatever its outcome, would impede the grand jury’s
investigation.
The Association was stung by a recent incident in which
it received information from the head football coach at the
University of Tennessee, Phillip Fulmer, concerning
possible violations of NCAA rules by another university.
It gave the information to a grand jury pursuant to sub-
poena. The information became public, precipitating a
defamation suit against Fulmer and the NCAA seeking
$60 million in damages. Dagnan v. Fulmer, No. 163126-3
(Knox Cty., Tenn., Chancery Ct., Nov. 21, 2005). The suit
doesn’t seem to be going anywhere. Defamation based on
material contained in a response to a subpoena, as in other
statements made in a judicial proceeding, Myers v. Pickering
Firm, Inc., 959 S.W.2d 152, 159 (Tenn. App. 1997); Glennon
v. Dean Witter Reynolds, Inc., 83 F.3d 132, 137 (6th Cir. 1996)
No. 06-3495 5
(Tennessee law); MacGregor v. Rutberg, No. 06-2829, 2007
WL 582494, at *1 (7th Cir. Feb. 27, 2007), is absolutely
privileged. Boice v. Unisys Corp., 50 F.3d 1145, 1148-49 (2d
Cir. 1995), as the trial court in the Dagnan case has ruled.
Dagnan v. Fulmer, supra, at 9-14. (The suit remains pend-
ing on other grounds.) The “common interest” privilege,
see, e.g., Pate v. Service Merchandise Co., 959 S.W.2d 569, 576
(Tenn. App. 1996); Kennedy v. Children’s Service Society, 17
F.3d 980, 985 (7th Cir. 1994); Gumbhir v. Curators of Univer-
sity of Missouri, 157 F.3d 1141, 1145 (8th Cir. 1998); Catrone
v. Thoroughbred Racing Associations of North America, Inc.,
929 F.2d 881, 887-88 (1st Cir. 1991); Restatement (Second) of
Torts § 596 (1977), is probably also applicable, since Fulmer
and the NCAA have a common interest in NCAA mem-
bers’ complying with the Association’s rules.
The existence of these privileges suggests that the
Association’s fears may be chimerical, and an additional
reason for thinking that is the strong incentive of members
to report their violations in order to take advantage of the
partial amnesty that the Association gives self-reporting
violators. (Granted, those incentives are diminished not
only by the threat of a defamation suit but also by the
fact that, the fewer whistleblowers there are, the less
likely violators of the NCAA’s rules are to be caught and
so the less incentive they have to turn themselves in.)
There is a further reason to doubt the NCAA’s need for
the protective order that it is seeking. The Department of
Education was not responsible for the subpoena in the
Fulmer case. The Department does not want to kill the
golden goose by promiscuously disclosing information it
receives from the NCAA and by doing so deterring the
reporting to the Association of violations of NCAA rules
that may also violate the laws that the Department en-
6 No. 06-3495
forces. Granted, the Department of Justice, directed by
the Inspectors General Act of 1978, 5 U.S.C. App. 3,
§ 6(e)(4), to promulgate guidelines for investigations by
inspectors general, requires them to notify the Attorney
General whenever they have reasonable grounds to
believes there’s been a violation of federal criminal law.
Attorney General Guidelines for Offices of Inspector
General with Statutory Enforcement Authority, § VII, at 4-5
(Dec. 8, 2003). But we have no authority to negate the
regulation by creating a new privilege.
To the extent permitted by the regulation, the internal
policies of the Department of Education seek to preserve
informants’ confidentiality. The NCAA argues that those
policies are negated by the Freedom of Information Act,
which, the Association contends, authorizes any member
of the general public (and not just the Department of
Justice, which like the Department of Education has an
incentive to protect the confidentiality of informants) to
get hold of documents in the possession of a government
agency that identify whistleblowers. The relevance of this
argument is unclear, because all the Association is seek-
ing is an order limiting the Department’s right to turn over
the documents to others; until then, the documents are
in the Department’s possession and thus exposed to
demands for disclosure under FOIA.
In any event, FOIA does not require (though neither
does it forbid, Chrysler Corp. v. Brown, 441 U.S. 281, 290-94
(1979)) the government to disclose “records or information
compiled for law enforcement purposes, . . . to the extent
that the production of such law enforcement records or
information . . . could reasonably be expected to disclose
the identity of a confidential source, including a State,
local, or foreign agency or authority or any private institu-
No. 06-3495 7
tion which furnished information on a confidential basis.” 5
U.S.C. § 552(b)(7)(D) (emphasis added). (There is a further
exemption for “personnel and medical files and similar
files the disclosure of which would constitute a clearly
unwarranted invasion of personal privacy,” § 552(b)(6),
and more extensive protection for the privacy of student
records under the Privacy Act of 1974, § 552a(a)(5). But
these provisions have no bearing on this case; the Depart-
ment of Education is not seeking the kind of information
that they protect.)
The NCAA argues that the phrase in section 7(D) that
we have italicized will prevent the Department of Educa-
tion from secreting the identity of sources of information
in the subpoenaed documents because the sources did
not furnish the information directly to the government on
a confidential basis. The argument is unpersuasive; it is
also contrary, one might have thought, to the NCAA’s
long-run interests. The part of the passage that we
quoted from section 7(D) that begins with “including”
implies only that a public or private institution that
furnishes information to the government and wants the
information kept confidential must so indicate; that is, it
must furnish the information to the government “on a
confidential basis.” To be meaningful, the “confidential
basis” must extend to the source of the institution’s infor-
mation. Sands v. Murphy, 633 F.2d 968, 970-71 (1st Cir.
1980); Coleman v. FBI, 13 F. Supp. 2d 75, 81-83 (D.D.C.
1998); Kuehnert v. FBI, 620 F.2d 662, 667 and n. 11 (8th Cir.
1980); see also Ferguson v. FBI, 83 F.3d 41, 43 (2d Cir. 1996)
(per curiam); Church of Scientology v. United States Depart-
ment of Justice, 612 F.2d 417, 426-27 (9th Cir. 1979). Who
would cooperate with police if told that the police depart-
ment could shield its own identity if it turned over the
8 No. 06-3495
information furnished to it to the federal government but
not the informant’s identity? And why would a law en-
forcement agency or other public agency want to conceal
its own identity? Protecting that identity can’t be the
purpose of the “including” provision. The provision
would have no domain if it did not protect indirect in-
formers.
Yet could it not be argued that a private organization
could never promise its informants confidentiality be-
cause the information could be subpoenaed from the
organization? But confidentiality is always a matter of
degree. An informant might wish the NCAA to conceal his
identity to the extent the Association could do so, while
realizing that there could be no absolute guarantee. Such
information would be furnished to the Association on a
confidential basis, and thus come within section 7(D)’s
exemption from compulsory disclosure. The Association
could remind any would-be informant that if he wanted
his identity concealed to the extent that the Association
could conceal it, he should make clear to the Association
that he is submitting his information on a confidential
basis.
However, in concluding that the NCAA has not made a
case for the protective order/quasi-privilege that it is
seeking, we do not rely, as the district judge did, on the
distinction between an “administrative” and a “judicial”
subpoena. Subpoenas ancillary to judicial proceedings are
issued by courts, while subpoenas ancillary to administra-
tive proceedings are often issued by the administrative
agency directly. But that is not an interesting difference,
because in either case the individual or organization that
is subpoenaed can ask a court to quash the subpoena.
5 U.S.C. § 555(d); Fed. R. Civ. P. 45(3); Fed. R. Crim. P.
No. 06-3495 9
17(c)(2). There is a significant distinction toward which the
distinction between “administrative” and “judicial”
subpoenas may be gesturing, but it is the distinction
between subpoenas issued in a lawsuit or administrative
proceeding or targeted pre-enforcement investigation, on
the one hand, and subpoenas issued pursuant to the
broader investigative powers that some government
agencies, but not private entities, possess. That distinction,
however, cuts across the administrative/judicial divide.
For example, the EEOC’s “power to conduct an investiga-
tion can be exercised only after a specific charge has been
filed in writing. In this respect the Commission’s investiga-
tory power is significantly narrower than that of the
Federal Trade Commission or of the Wage and Hour
Administrator, who are authorized to conduct investiga-
tions, inspect records, and issue subpoenas, whether or
not there has been any complaint of wrongdoing.” EEOC
v. Shell Oil Co., 466 U.S. 54, 63-65 (1984), quoting 110 Cong.
Rec. 7214 (1964); see also United States v. Morton Salt Co.,
338 U.S. 632, 641-43 (1950); Endicott Johnson Corp. v. Perkins,
317 U.S. 501, 509-10 (1943); FTC v. Ken Roberts Co., 276
F.3d 583, 585-87 (D.C. Cir. 2001).
The distinction thus relates to the substantive scope of
a subpoena, and so has no bite here because the Depart-
ment of Education is operating well within the substan-
tive scope of its investigative powers. See 5 U.S.C. App. 3
§§ 6(a)(2), (4). The issue in this case—whether the burden
of compliance with the subpoena (unless there is a pro-
tective order) exceeds the need for the information
sought in it—is remote from the distinction between
administrative and judicial subpoenas. That leads us to
wonder about the occasional judicial statements that an
administrative subpoena, unlike a judicial subpoena, can
10 No. 06-3495
be quashed only if compliance would be “excessively
burdensome so as to threaten the normal operation of the
party’s business.” Commodity Trend Service, Inc. v. CFTC,
223 F.3d 981, 987 (7th Cir. 2000); see also EEOC v. United
Air Lines, Inc., 287 F.3d 643, 651-54 (7th Cir. 2002); NLRB
v. American Medical Response, Inc., 438 F.3d 188, 192-93 (2d
Cir. 2006). (Other cases do not distinguish between the
two types of subpoena, so far as assessing burden is
concerned. SEC v. Arthur Young & Co., 584 F.2d 1018, 1023-
24, 1032-33 (D.C. Cir. 1978); cf. EEOC v. Sidley Austin Brown
& Wood, 315 F.3d 696, 700 (7th Cir. 2002).) It is true that
the stakes in many government cases exceed those in most
private cases. If the government is prosecuting a major
criminal, information that it has subpoenaed for aid in the
prosecution is likely to confer a greater public benefit
than information sought in a run-of-the-mill tort case, and
if so the target of the subpoena will have to demonstrate
a greater burden of compliance in order to get it quashed.
But this difference cuts across the distinction between
administrative and judicial subpoenas. A prosecution is not
an administrative proceeding; the subpoena is judicial.
Even restating the distinction as one between public and
private cases is unsatisfactory, since many private cases
involve greater stakes than many public. In this case, in any
event, the burden of compliance with the subpoena,
even without a protective order to cushion the effect of
compliance, is speculative and is outweighed by the
investigatory needs of the Department of Education.
AFFIRMED.
No. 06-3495 11
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—3-21-07