International Business Machines Corp. v. United States

480 F.2d 293, 17 Fed. R. Serv. 2d 193, 1973 U.S. App. LEXIS 10030

• Court: Court of Appeals for the Second Circuit
• Decided: May 8, 1973
• Docket: Nos. 363, 364, Dockets 72-2106, 72-2107
• Status: Published

Opinions

MULLIGAN, Circuit Judge:

After a divided panel opinion in this case was filed (the majority and dissenting opinions appear in 471 F.2d 507 (2d Cir. 1972)) a petition for rehearing en banc was granted. Both International Business Machines Corporation (IBM) and the United States of America thereupon submitted additional briefs.

IBM is the defendant in a civil antitrust action brought by the Government in the United States District Court for the Southern District of New York (the New York action). IBM is also defending a number of private antitrust suits which had been consolidated in the United States District Court for the District of Minnesota before Judge Philip Ne-ville under the Multidistrict Litigation Act (28 U.S.C. § 1407 (1970)). The case which precipitated the controversy here was Control Data Corp. v. IBM which is referred to as the CDC action.¹ The Government has not been a party to any of the Minnesota actions.

The present Appeal and Petition for Extraordinary Writ (28 U.S.C. § 1651; Fed.R.App.P. 21) are addressed to an order in the New York action (Pretrial Order No. 5) made by Chief Judge Edelstein on September 26, 1972. The order recited that IBM “in furnishing to plaintiff, United States of America, microfilm copies of documents in the course of pretrial proceedings . excised from the microfilm prior to delivering it to plaintiff copies of documents reproduced on said microfilm which constituted or contained allegedly privileged material, as to which excised documents IBM made the claim that such documents had been delivered to a third party, Control Data Corporation, through inadvertence on its part;” and that the Government “filed a motion in this Court dated April 7, 1972, calling for the production of the materials thus withheld and excised by IBM, plaintiff’s ground being that the production of said documents to Control Data Corporation constitutes a waiver of all claims of privilege by IBM as to said documents .” The order directed that “IBM immediately deliver to plaintiff, in the form provided to Control Data Corporation, a copy of each document withheld and excised by it from the said microfilm, all such documents purportedly being identified and described by Charles M. Waygood, attorney for defendant, in a letter addressed to plaintiff’s counsel, dated April 4, 1972, a copy of said letter being attached to and made a part of this order.”

The attack upon Judge Edelstein’s order is essentially based upon two grounds: (1) IBM was directed by the Minnesota Court in a discovery proceeding in the CDC action to produce some 17 million document pages in three months. The production of such a massive amount of material made the inadvertent surrender of privileged documents inevitable. Judge Neville finally ruled on April 18, 1972 that the privilege had not been waived merely because the documents had been surrendered and examined by CDC. IBM claims that the order of Judge Edelstein rejecting the concept of inadvertent waiver, is in direct conflict with the order of Judge Ne-ville which protected the right of IBM to claim the attorney-client privilege in the CDC action. (2) The Government violated an agreement made between its attorneys and IBM’s whereby the Government abandoned its own discovery program in New York and agreed to accept an edited microfilm of documents already supplied to CDC by IBM. The excised material consisted of some 1200 documents which IBM considered privileged and inadvertently produced.

IBM argues that Pretrial Order No. 5 of Judge Edelstein should be vacated as an abuse of discretion and an usurpation of power, creating irreparable damage to IBM in violation of both the order of Judge Neville and in breach of the agreement between the parties. We hold that we have no jurisdiction to review the discovery order below either by appeal or by mandamus.

I

The Expediting Act (15 U.S.C. § 29) deprives this Court of jurisdiction to hear the instant appeal.² This statute explicitly provides that appeals in Government initiated civil antitrust actions, lie only to the Supreme Court from the final judgment of the district court. This is a civil antitrust action brought by the Government. The order is not final and this is not the Supreme Court. In construing the statute the Supreme Court has consistently held that interlocutory orders in these cases are appealable to neither court.

Mr. Justice Brandeis noted in United States v. California Coop. Canneries, 279 U.S. 553, 558, 49 S.Ct. 423, 425, 73 L.Ed. 838 (1929), that the Expediting Act “precluded the possibility of an appeal to either court from an interlocutory decree.” This view has been followed in subsequent decisions of that Court and Circuit Courts ever since.³

The only conceivable escape provided by Congress from the Expediting Act was the Interlocutory Appeals Act of 1958 which allows an appeal from an interlocutory order if the district judge is of the opinion that the order involves “a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation . . . 28 U.S.C. § 1292(b). The escape is not available here. Chief Judge Edelstein has declined to certify that a controlling question of law is involved. There is authority for his position.⁴ Even if he had certified, the recent decision of the Supreme Court in Tidewater Oil Co. v. United States, 409 U.S. 151, 173-174, 93 S.Ct. 408, 421 (Dec. 6, 1972) squarely holds: “Hence, we conclude that § 1292(b) did not establish jurisdiction in the Court of Appeals over interlocutory orders in Expediting Act cases. The exclusive nature of the jurisdiction created in § 2 of the Expediting Act has consistently been recognized by this Court, and we hold today that that exclusivity remains unimpaired.” (Emphasis added.)

The dissent seeks to avoid the Supreme' Court’s continuing rejection of jurisdiction in the Court of Appeals in these cases, by arguing that the interlocutory order here has no special antitrust significance. We cannot interpret Tidewater to allow the Court of Appeals, even where a § 1292(b) certificate has been issued, to determine in its discretion whether the interlocutory order has substantial, insubstantial or no antitrust significance. The Court (409 U.S. at 169-172 & n.43, 93 S.Ct. at 419-420 & n.43) plainly indicates that the Act was intended to preserve to the Supreme Court alone the right to review all interlocutory orders and then only when there is an appeal from the final judgment. “. . . Congress enacted § 2 of the Expediting Act in 1903 to withdraw all intermediate appellate jurisdiction in government civil antitrust cases.” 409 U.S. at 154-155, 93 S.Ct. at 411 (emphasis in original; footnote omitted).

The purpose of the Expediting Act, as its very title indicates, is to eliminate piecemeal appeals and to bring to the Supreme Court expeditiously, the entire case without intervening appeals to Courts of Appeals. There is no suggestion and no holding of which we are aware that would give this Court jurisdiction to determine appealability on the basis of the trade regulatory significance of the appeal. There is a grave question as to whether the Expediting Act has been efficacious and it may well be that Courts of Appeals should have jurisdiction to hear appeals from the final judgment. However as Mr. Justice Marshall noted in Tidewater:

Yet, despite all of these criticisms, our personal views as to the wisdom of § 2 are, of course, no basis for disregarding what we are bound to recognize as the plain and unaltered intent of Congress to require that appeals in government civil antitrust cases be taken only from final judgments and only to this Court. (409 U.S. at 170, 93 S.Ct. at 419).

We see no basis in the Act of Congress or in the holdings of the Supreme Court which bind us here, to engraft an exception based upon the character of the order. So long as it is interlocutory, and that cannot be disputed, we can have nothing to do with it. If the Supreme Court considers itself bound despite its misgivings as to the continuing viability of the Expediting Act, a fortiori this Court is inhibited from circumvention by artificial distinction. Whether the intermediate order involves a question of antitrust law or not, the appeal is piecemeal and delay is occasioned, the very vice the Expediting Act was intended to eliminate.

It is true that even though the Government may have initiated a civil antitrust action, if a dispute arises which is entirely between private parties and does not concern the Government, then the Expediting Act has been held not to bar an appeal to the Court of Appeals. Shenandoah Valley Broadcasting, Inc. v. ASCAP, 375 U.S. 39, 40, 84 S.Ct. 8, 11 L.Ed.2d 8 (1963); Standard Fruit & S. S. Co. v. United Fruit Co., 393 U.S. 406, 89 S.Ct. 684, 21 L.Ed.2d 634 (1969) (per curiam — See United States v. Standard Fruit & S. S. Co., 410 F.2d 553 (5th Cir.), cert. denied, 396 U.S. 820, 90 S.Ct. 59, 24 L.Ed.2d 71 (1969)); United States v. ASCAP, 341 F.2d 1003, 1007 (2d Cir.), cert. denied, 382 U.S. 877, 86 S.Ct. 160, 15 L.Ed.2d 119 (1965). This recognized application of the Expediting Act was recently followed by the Supreme Court in Garrett Freightlines, Inc. v. United States, 405 U.S. 1035, 92 S.Ct. 1311, 31 L.Ed.2d 577 (1972). In that case, although the United States had commenced a civil antitrust action (United States v. Navajo Freight Lines, Inc., 339 F.Supp. 554 (D.Colo. 1972)), the district court dismissed on the ground that the Interstate Commerce Commission had primary jurisdiction. The United States did not appeal, but Garrett Freightlines, a named defendant in the district court but allied with the Government as an alleged unwilling victim of Navajo, took a direct appeal to the Supreme Court. The dismissal by the Court simply cited the Shenandoah case. The citation can only mean the Court reasoned that since the Government no longer considered itself aggrieved, the dispute was between private parties and hence an appeal lay to the Court, of Appeals. The Shenandoah rule is not applicable here of course since this dispute below and on appeal continues to be between the United States and IBM.

The appellant is clearly foreclosed from appeal by the Expediting Act and it cannot escape by seeking a review through the device of the extraordinary relief provided by the All Writs Act, 28 U.S.C. § 1651. This proposition was squarely established by the Supreme Court in United States Alkali Export Ass’n v. United States, 325 U.S. 196, 203, 65 S.Ct. 1120, 89 L.Ed. 1554 (1945).

The writs may not be used as a substitute for an authorized appeal; and where, as here, the statutory scheme permits appellate review of interlocutory orders only on appeal from the final judgment, review by certiorari or other extraordinary writ is not permissible in the face of the plain indication of the legislative purpose to avoid piecemeal reviews.

The Alkali Export Ass’n holding was reaffirmed by the Supreme Court in the Tidewater opinion. 409 U.S. at 165 n. 25, 93 S.Ct. at 415 n. 25. The Court further noted: “application for the extraordinary writ must be made to this Court where ‘sole appellate jurisdiction lies’ in such eases.” 409 U.S. at 160, 93 S.Ct. at 414.

It follows therefore that we have no more jurisdiction to review by way of mandamus than we do by appeal. Assuming that extraordinary relief is appropriate here, Tidewater clearly holds that application for the writ must be made to the Supreme Court.

II

IBM argues further that in Cohen v. Beneficial Indus. Loan Co., 337 U.S. 541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), the Supreme Court indicated that an exception to the finality of judgment condition for appeal could be found “in that small class [of decisions] which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to, be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.”

We cannot agree that Cohen provides an exception for the Courts of Appeals from the exclusive jurisdiction of the Supreme Court in Expediting Act cases. Since the Supreme Court has rejected the concept that the Courts of Appeals have jurisdiction in those cases where a district judge certifies a controlling question of law under § 1292(b), we are at a loss to understand why we would have jurisdiction where no certification takes place. Moreover we would be in the highly anomalous situation of having jurisdiction to review an intermediate order in a case where we had no jurisdiction over the final judgment, which is appealable only to the Supreme Court. This anomaly already noted in Tidewater (409 U.S. at 172-173, 93 S.Ct. at 421) with respect to 1292(b) cases, is all the more pronounced here.

Even if arguendo the Expediting Act is not applicable, we do not find that Cohen provides IBM succor here either by way of appeal or mandamus. Chief Judge Friendly recently expressed the attitude of this Circuit in Weight Watchers, Inc. v. Weight Watchers Int’l, Inc., 455 F.2d 770, 773 (2d Cir. 1972):

We have often indicated that Cohen must be kept within narrow bounds, lest this exception swallow the salutary “final judgment” rule, (citations omitted)

This Court has held that a discovery order involving the scope of an attorney’s work product in the so-called “big case” is not appealable under the Cohen rule. American Express Warehousing, Ltd. v. Transamerica Ins. Co., 380 F.2d 277 (1967). Judge Feinberg’s exhaustive opinion in that case reviewed the cases both pre and post-Cohen which in our view vindicate the policy of non-appealability of discovery orders. It is equally clear that mandamus cannot be utilized as a substitute for an appeal in these cases.

The contention that the claim of privilege enjoys a special status in'" considering a petition for an extraordinary writ has been expressly rejected by the United States Supreme Court in Will v. United States, 389 U. S. 90, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967).

City of- Los Angeles v. Williams, 438 F. 2d 522 (9th Cir. 1971).⁵

Aside from this authority we do not find that this case fits within the criteria normally required for either Cohen or mandamus consideration. An important factor bearing upon the application of Cohen is whether _a.. decision will settle a point once and for all, or will it open a flood of appeals. Weight Watchers, Inc. v. Weight Watchers Int’l, Inc., supra, 455 F.2d at 773.

Cohen did settle a collateral issue finally by upholding in a diversity action, the constitutionality and applicability of a New Jersey statute which provided that in a stockholder derivative action an unsuccessful plaintiff is liable for litigation expenses and is obligated to post a bond before commencing such action if his stockholdings fall below the statutory minimum. No such wide ranging issue is to be finally decided here. Judge Neville’s order of April 18, 1972 states: “Inadvertence becomes of course a fact question and differs in each case.” Control Data Corp. v. IBM, Doc. No. 3-68 Civ. 312, at 6 (D.Minn.). It is difficult to envisage a rule of law we could enunciate which could conveniently or properly calibrate all of the factors to be considered in determining whether the surrender of documents now deemed privileged, constituted a waiver. That issue has been determined here by Judge Edelstein and a review by us, even if permissible, could only spawn a spate of piecemeal appeals which would create intolerable delay.

Nor do we discern here any disruption of the administration of justice in the federal court system. Chief Judge Edelstein clearly had the power to direct disclosure under Fed.R.Civ.P. 37. This matter is pending before him and not before Judge Neville whose power was limited to the discovery in the CDC action then pending before him. That ease has since been settled and in any event the Government was never a party to it.

IBM urges that its screening techniques were weakened when it removed its interceptor who was making final checks to eliminate the submission of privileged documents, in reliance upon the assurance of Judge Neville that he would not find any waiver of privilege. IBM further argues that the Government agreed to receive the microfilm data with the excised material eliminated and hence agreed to the non-waiver of privilege by IBM. Both arguments were considered in some detail in the initial opinion. (471 F.2d at 522-523 (Mulligan, J., dissenting)). Suffice it to say that the record does not establish clearly that all of the documents for which privilege is now claimed were surrendered in reliance on Judge Neville’s ruling. Furthermore, we were not persuaded that the Government which agreed to receive the edited tapes thereby agreed to forego the position that the initial surrender to CDC constituted a waiver. In any event if any error was committed below with respect to these arguments it did not rise to the magnitude appropriate for either a Cohen appeal or the issuance of the extraordinary writ of mandamus.⁶

In sum we conclude that this appeal and petition for mandamus must be dismissed since we lack jurisdiction under the Expediting Act and in no event is there any basis to review this interlocutory order either by appeal or mandamus.

1 . Since the time the opinions of the panel which initially considered this appeal were filed on December 19, 1972, the ODO case has been settled. Still pending are two other actions, Greyhound Computer Corp. v. IBM on appeal in the Ninth Circuit after trial where judgment was entered for IBM. (See 1972 CCH Trade Cas. ¶ 74,205 (D.Ariz. July 10, 1972)). The Telex Corp. v. IBM action has been remanded to the Northern District of Oklahoma for trial. (En Banc Memorandum for Petitioner-Appellant at 7 n.*).

2 . 15 U.S.C. § 29 provides :

In every civil action brought in any district court of the United States under any of said [antitrust] Acts, wherein the United States is complainant, an appeal from the final judgment of the district court will lie only to the Supreme Court.

3 . See Tidewater Oil Co. v. United States, 409 U.S. at 160-161, 93 S.Ct. at 414-415, 34 L.Ed.2d 375 (Dec. 6, 1972) ; Brown Shoe Co. v. United States, 370 U.S. 294, 305 n. 9, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962) ; the cases so holding are listed in the exhaustive opinion of the First Circuit in United States v. Cities Serv. Co., 410 F.2d 662, 665 n. 5 (1969). Other cases are noted in Annot., 10 A.L.R. Fed. 607, 621-624 (1972).

4 . Atlantic City Elec. Co. v. General Elec. Co., 337 F.2d 844 (2d Cir. 1964). In his dissenting opinion in American Express Warehousing, Ltd. v. Transamerica Ins. Co., 380 F.2d 277, 285 n. 2 (2d Cir. 1967), Chief Judge Lumbard commented:

“An order granting or denying discovery could rarely, if ever, satisfy this requirement,” i. e., that an immediate appeal would materially advance the conduct of the litigation.

5 . The Court expressly rejected its previous holding in Continental Oil Co. v. United States, 330 F.2d 347 (9th Cir. 1964), still relied upon by IBM in its en banc memorandum.

6 . As this Court recently pointed out in United States v. DiStefano, 464 F.2d 845, 850 (1972), where the district judge has the power to make a determination under the Federal Rules,

Will v. United States, 389 U.S. 90, 95, 104, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967), makes plain that mere error, even gross error in a particular case, as distinguished from a calculated and repeated disregard of governing rules, does not suffice to support issuance of the writ. “While the courts have never confined themselves to an arbitrary and technical definition of ‘jurisdiction,’ it is clear that only exceptional circumstances amounting to a judicial ‘usurpation of power’ will justify the invocation of this extraordinary remedy . Mandamus, it must be remembered, does not ‘run- the gauntlet of reversible errors.’ Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 382, 74 S.Ct. 145, 147, 98. L.Ed.2d 106 (1953). Its office is not to ‘control the decision of the trial court,’ but rather merely to confine the lower court to the sphere of its discretionary power. Id., at 383, 74 S.Ct. 148.” ... The Court had said long before that the all-writs statute, 28 U.S.C. § 1651(a), cannot “be availed of to correct a mere error in the exercise of conceded judicial power,” but can be used only “when a court has no judicial power to do what it purports to do — when its action is not mere error but usurpation of power . . . ” De Beers Consolidated Mines, Ltd. v. United States, 325 U.S. 212, 217, 65 S.Ct. 1130, 1133, 89 L.Ed. 1566 (1945).

See also S.E.C. v. Stewart, 476 F.2d 755 (2d Cir., March 16, 1973).