Tobias v. Kwiatek

98 F.R.D. 513, 36 Fed. R. Serv. 2d 1456, 1983 U.S. Dist. LEXIS 20376
CourtDistrict Court, D. Vermont
DecidedJune 24, 1983
DocketCiv. Nos. 82-128, 80-273
StatusPublished
Cited by2 cases

This text of 98 F.R.D. 513 (Tobias v. Kwiatek) is published on Counsel Stack Legal Research, covering District Court, D. Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tobias v. Kwiatek, 98 F.R.D. 513, 36 Fed. R. Serv. 2d 1456, 1983 U.S. Dist. LEXIS 20376 (D. Vt. 1983).

Opinion

DEFENDANTS’ MOTIONS TO COMPEL; MOTIONS FOR PROTECTIVE ORDERS

HOLDEN, District Judge.

The questions presented derive from various motions by the defendants to compel discovery of a large number of documents related to Perma-Chrome, Inc. (“PermaChrome”), a Vermont corporation begun by the individual plaintiff in this action.

It appears from the pleadings that David C. Tobias, the plaintiff, and Alfred Kwiatek and Arthur Berman, the defendants, are the three equal and only shareholders of Jonergin Vermont, Inc. (“Jonergin Vermont”), a Vermont corporation. This company is the holding company for an operating company, Jonergin, Inc. (“Jonergin Delaware”), a Delaware corporation conducting operation in Vermont. The claims in this suit arise from the removal by Kwiatek and Berman of Tobias from his position as treasurer of Jonergin Delaware, and from counter-claims by the defendants alleging various breaches of fiduciary and contractual duties owed by Tobias to Jonergin Vermont and Jonergin Delaware.

Tobias is the sole shareholder of Jonergin Co., Inc. (“Jonergin Canada”), a Canadian corporation. Jonergin Canada and Jonergin Delaware entered a bi-lateral agreement in 1972. Both corporations are engaged in the manufacture and sale of labels and forms, more particularly including metallized papers and films used in the manufacture of these products. Perma-Chrome a Vermont corporation designed to operate as the United States arm of Jonergin Canada, has never commenced doing business here or elsewhere. Tobias owns 50% of the stock of Perma-Chrome, and the remaining 50% is owned by Helmut Schmook, a West German citizen. The defendants assert as one of their claims that Tobias, in part through the Perma-Chrome venture, is competing or intends to compete with Jonergin Delaware, in contravention of his fiduciary duties and in breach of contractual agreements. Thus, the relevancy of the documents sought here is their capability to shed light on the claim [515]*515that Tobias breached various duties to Jonergin Vermont and Jonergin Delaware by instituting competing ventures.

The defendants filed a request to produce documents directed to Tobias. This request included all documents relating to PermaChrome, including an application and related materials submitted to the Vermont Industrial Development Authority (“VIDA”) in order to obtain financial assistance in beginning the venture. The defendants also issued subpoenas duces tecum to Albert W. Coffrin, III, the manager of VIDA, requesting the Perma-Chrome application and all related materials in the possession of VIDA, and to Robert Justis, Director of the Economic Development Department of the Agency of Development and Community Affairs, requesting similar documents. The defendants further requested that Steven Bourgeois, an officer of the Franklin-Lamoille Bank, provide information relating to that institution’s dealings with PermaChrome. The first two state officers have requested that this court issue protective orders with regard to certain of the materials sought by the defendants, and Steven Bourgeois has indicated that the FranklinLamoille Bank will not release the documents in its possession relating to PermaChrome without an order from the court.

At a hearing held before the court on February 25, 1983, the parties agreed that the document request directed to Robert Justis would be suspended pending the resolution of the motions relating to VIDA and to the plaintiff himself. It was further agreed that the plaintiff and VIDA would produce all the requested materials for in camera inspection by the court, in order that the court might determine what claims of privilege are applicable to these papers. The documents were so submitted to the court, and the parties have reached agreement regarding the discoverability of certain of the materials. The court has examined the documents submitted for inspection, and sets forth herein its conclusions.

VIDA asserts two types of governmental privileges with respect to the materials in its possession relating to Perma-Chrome. These are the “executive privilege” and the “government reports” or “official information” privilege. The parties have not referred to decisional law of Vermont on governmental privileges; this analysis proceeds on the basis of federal law.

The executive privilege is intended to shield from discovery intra-governmental memoranda that contain the thought processes, opinions and judgments of government officers leading up to agency decisions. These are often referred to as “pre-decisional memoranda.” The purpose of this privilege is to allow the officers of government to express their views freely and to facilitate the uninhibited exchange of ideas in government decision making. Machin v. Zuckert, 316 F.2d 336 (D.C.Cir.1963); Mobil Oil Corp. v. Dept. of Energy, 520 F.Supp. 414 (S.D.N.Y.1981). This privilege may be qualified in two ways, however. First, purely factual materials and materials obtained outside the government itself and incorporated into the opinion memoranda may be discovered after the privileged materials are expunged. Branch v. Phillips Petroleum Co., 638 F.2d 873, 879-80 (5th Cir.1981); Black v. Sheraton Corp. of America, 564 F.2d 531 (D.C.Cir.1977). Second, the privilege for the opinion materials is not itself absolute. In some cases, the litigants’ need for the materials may be balanced against the public harm caused by the potential chilling effect on the governmental decision making process. Black v. Sheraton, supra, 564 F.2d 531; McClelland v. Andrus, 606 F.2d 1278, 1287, n. 54 (2d Cir.1979). Such a balancing need not be undertaken in the instant case, as the parties have agreed that any deliberative materials need not be disclosed by VIDA.

The official information, or government reports, privilege is the more important one in the present context, since this privilege does serve to protect purely factual material and material that originates outside the government. See, e.g, Branch v. Phillips Petroleum Co., supra, 638 F.2d 873; McClelland v. Andrus, supra, 606 F.2d 1278; Association for Women in Science v. Califano, 566 F.2d 339 (D.C.Cir.1977); 8 C. [516]*516Wright, A. Miller and F. Elliott, Federal Practice and Procedure § 2019. The Per-ma-Chrome application submitted by the plaintiff to VIDA comprises this type of material.

The privilege for government reports is created by statutes which affirmatively authorize the classification of certain documents as confidential. The same result may be obtained through regulations if such regulations are promulgated pursuant to specific statutory authority.

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Bluebook (online)
98 F.R.D. 513, 36 Fed. R. Serv. 2d 1456, 1983 U.S. Dist. LEXIS 20376, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tobias-v-kwiatek-vtd-1983.