Klose v. United States Bankruptcy Court (In re Christian Life Center)

23 B.R. 770, 1982 Bankr. LEXIS 3378

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: September 9, 1982
• Docket: BAP No. NC-81-1347-GEV; Bankruptcy No. 1-7900779; Adversary Nos. 1-80-0004, 1-80-0050
• Status: Published

Opinions

OPINION

Before GEORGE, ELLIOTT and VOL-INN, Bankruptcy Judges.

ELLIOTT, Bankruptcy Judge:

Petitioner Klose petitions for relief from a contempt order issued by respondent trial judge.

The debtor, Christian Life Center, operated a church. Members of the church were asked to deposit their money, at interest, with the church. The State Superintendent of Banks investigated and decided that the church was operating a bank without appropriate government permission and issued a cease and desist order. This was apparently followed by a “run on the bank” and the debtor sought protection of the bankruptcy court.

Former members of the church filed a fraud action against the debtor and its pastor in state court. The debtor removed the case to the bankruptcy court. The pastor subpoenaed petitioner Klose, a newspaper reporter who had written extensively about the debtor’s problems with the state. Klose is not a party to the litigation.

Mr. Klose refused to respond to preliminary questions propounded by Judge Brown. The questions Klose refused to answer are as follows:

1. Did you cause another employee of the Press Democrat (Klose’s employer) to deposit a hundred dollars in the trust?

2. Did you try to get the Corporations Commissioner to investigate the Christian Life Center Trust Fund?

3. If yes, did he refuse?

4. Did you ask the Superintendent of Banks to investigate or did you file a complaint?

Newsman Klose’s refusal to answer was based upon Federal Rule of Evidence 501, California Evidence Code § 1070 and case law developing therefrom. Los Angeles Memorial Coliseum v. National Football League, 89 F.R.D. 489 (1981), interpreting Rule 501 and discussing § 1070 as well as the First Amendment and the California Constitution is dispositive. As stated by the court at Page 494,

In civil eases, courts faced with motions to enforce or to quash subpoenas directed against non-party journalists have refused to enforce such subpoenas, absent a showing: (1) that the information is of certain relevance; (2) that there is a compelling reason for the disclosure; (3) that other means of obtaining the information have been exhausted; and (4) that the information sought goes to the heart of the seeker’s case.

The defendant pastor has not satisfied the standards set forth in the Coliseum case. Whether Klose called the matter to the attention of the authorities by inquiry or complaint is of uncertain relevance at best, and the information clearly does not go to the heart of the seeker’s defense.

There has been no showing that the information sought by questions 2, 3 and 4 put to reporter Klose could not be obtained from other sources. Indeed, the petitioner has submitted affidavits by the Commissioner of Corporations and the superintendent of Banks that supply answers to the trial court’s questions.

The California Code of Evidence and the Federal common law, as set forth in Branzburg v. Hayes, 408 U.S. 665, 92 S.Ct. 2646, 33 L.Ed.2d 626 (1972), allows the preliminary questioning of a reporter to determine if he was an instigator or participant (as opposed to a mere reporter) of the illicit activity in question. The Branzburg case, however, involved grand jury investigation of criminal activity. The court in the Coliseum case remarked, 89 F.R.D. at Page 493,

Courts have emphasized that the public interest in protecting journalists’ confidential sources is even stronger in civil cases than it is in criminal cases, [citing case], ‘in civil cases ... the public interest in non-disclosure of a journalist’s confidential sources outweighs the public and private interest in compelled testimony.’

We reverse and remand to the trial court with instructions to vacate the citation and order holding Klose in contempt.