The SEC has met its initial burden of establishing prima facie that the privilege is applicable to the information sought, under the three-part test set forth in In re Sealed Case: the privilege has been invoked formally by the Commissioners, speaking through the SEC Secretary, see Katz Declaration PP 4-6; the assertion of the privilege is based on actual personal consideration by the Commissioners, according to the Secretary's declaration, see id. P 4; and the SEC has explained why it claims that the information sought properly falls within the scope of the privilege.
The Court must still balance the government's desire for confidentiality against the movants' need for the information sought. As to the three narrow categories of documents that remain in dispute after the concessions in movants' reply memorandum, the SEC's explanation of how disclosure of these documents would interfere with its investigatory and enforcement operations is not overwhelming. Because all of these documents were either received from or provided to United Telecom, it is difficult to see how United Telecom would learn anything new as a result of their disclosure to movants. The SEC's memorandum does not state that any person or entity other than United Telecom is a subject of the investigation. Nevertheless, there certainly is some risk that the SEC's activities could be impeded if, as the SEC suggests, third parties who have potential liability for the acts under investigation are apprised of the state of the SEC's inquiry into the matter. See Zuckerman Declaration at P 5 And beyond that, there is a certain inherent interference in the SEC's operations that results merely from requiring the Commission to divert its attention from its investigation to document production in a private civil action.
More importantly, however, the factors identified by the Circuit in In re Sealed Case strongly favor non-disclosure. Movants have not articulated any compelling need for this information. Most importantly, all of the documents identified by movant are most probably in the possession of United Telecom.
It seems clear that movants should be required to seek these documents from United Telecom -- which is, after all, a party to the underlying Kansas litigation -- before serving a subpoena on the SEC. See In re Sealed Case, 856 F.2d at 272 (factor (9) inquires "whether the information sought is available through other discovery or from other sources"); Collins v. Shearson/American Express, Inc., 112 F.R.D. 227, 229 (D.D.C. 1986) (upholding agency's claim of investigatory law enforcement privilege because, inter alia, "plaintiffs have not even attempted to take advantage of some of the possible alternate sources for this information" (footnote omitted)). In addition, the fact that the SEC's investigation is ongoing also favors non-disclosure. See In re Sealed Case, 856 F.2d at 272 (factor (6)). In the absence of any showing that these documents are unavailable from United Telecom or that movants have an urgent and compelling need for them, the Court concludes that the motion to compel should be denied.
Accordingly, for the reasons set forth above, it is this 1st day of May, 1992, hereby
ORDERED that the motion to compel is DENIED.
Louis F. Oberdorfer
United States District Judge