Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 87 C 1600 -- Milton I. Shadur, Judge.
Wood, Jr., Manion, and Kanne, Circuit Judges.
John Powers filed suit under 42 U.S.C. § 1983 contending that he had been demoted from his position as Associate General Attorney with the Chicago Transit Authority ("CTA") pursuant to a campaign to drive out white attorneys and replace them with black attorneys. Through formal discovery, Powers sought to obtain documents that had been prepared by Joyce Hughes, the CTA's General Attorney, outlining her personnel reorganization plans. Near the close of discovery, yet outside of formal discovery, Powers somehow obtained a copy of a Joyce Hughes memorandum that related to the "Reorganization of the General Attorney Division." Powers considered this memo to be a "smoking gun." The memo stated that "the major difficulty in a staffing realignment . . . is Section 28 of the Metropolitan Transit Authority Act [which] protects all CTA employees from discharge or demotion without cause." The memo emphasized the importance of building "a paper record which will substantiate cause for discharge or demotion" of employees.
In December 1987, Powers served the defendants with a request to admit or deny the Hughes memorandum. On receipt of the request, the defendants hand delivered a letter to Powers' attorney, John L. Gubbins, asserting that the memorandum contained privileged attorney-client information. The letter requested Powers and Gubbins to return all copies of the memorandum and to stop all further dissemination of the memo. The letter also demanded an explanation of the circumstances under which Powers and Gubbins obtained the memorandum.
Despite the defendants' plea, Robert O'Conner, another client of Gubbins who was also suing the CTA for reverse discrimination and who had previously obtained a copy of the memorandum from Gubbins, gave a copy of the memo to members of the media. In the following days, the memorandum was widely published in the Chicago print and broadcast media. In addition, Gubbins continued to disseminate the memo, providing a copy to another attorney who was representing a client suing the CTA for reverse discrimination.
On December 24, 1987, the defendants presented the district court with a motion for a protective order and evidentiary hearing. Defendants asserted in their motion that the Hughes memorandum contained confidential information within the ambit of defendants' attorney-client privilege. Defendants' motion sought to bar Powers, Gubbins, and Gubbins' clients from using or further disseminating the memo during the course of Powers' suit. The district court declined to issue a protective order at that time. Instead, it ordered Powers and Gubbins to first answer the defendants' questions concerning the circumstances under which the memorandum came into their hands. The district court believed that, on its face, the memorandum contained privileged attorney-client information. However, the district judge reasoned that the only way he could rule on the merits of the defendants' motion was to first determine whether the CTA had in any manner waived its attorney-client privilege in the course of events through which Powers obtained the memo.
At the December 24th presentation of defendants' motion, Powers chose January 8, 1988, as the date to respond to the defendants' questions. Powers failed however, to file any response on January 8th. The defendants then renewed their motion for a protective order and evidentiary hearing. On January 14, 1988, the district court heard the motion and again ordered Powers to disclose the circumstances under which he obtained the Hughes memo. The court set January 19th as the new response date. The court also set a hearing for January 22nd should Powers' response prove unsatisfactory.
On January 19th, Powers again failed to respond. Two days later, Gubbins filed a response with an attached letter. The letter was written by Robert O'Connor, the client of Gubbins who had released the Hughes memorandum to the media. Gubbins contended that the letter explained the circumstances under which Powers obtained a copy of the memorandum. In fact, however, the letter did not explicitly state how Powers obtained the memorandum. Rather, the letter merely implied that Powers obtained the memo from O'Connor.*fn1 At the January 22nd hearing, the district court found that Powers' response was inadequate because it did not name the person who gave Powers the memo. The district court ordered an evidentiary hearing solely on the issue of how the Hughes memorandum got into possession of anybody outside of the CTA as an entity.
At the evidentiary hearing, Powers submitted his own affidavit. The affidavit stated that a CTA employee gave Powers the memo but also announced that Powers refused to name the employee based upon a "confidential-informant-in-litigation" privilege. The affidavit stated that Powers accepted the memo with the understanding that he would keep the employee's identity confidential. The district court rejected Powers' "confidential-informant" privilege, finding that it lacked any basis in law. When the district court then directed Powers to name the person who gave him the Hughes memorandum, Powers still refused to answer. At that point, the district judge recessed the evidentiary hearing for five days. At the resumption of the hearing, Powers again refused to name his source. To accommodate Powers, the court agreed to take his testimony in camera for counsel's eyes and ears only. After the court reconvened in chambers, however, Powers still refused to answer. The court then issued a "direct court order" that Powers answer the next day, March 8, 1988. On March 8th, Powers reasserted his "confidential-informant-in-litigation" privilege and again refused to answer.
Faced with Powers' refusals to provide information as ordered, the district court held Powers in civil contempt. As a sanction to compel compliance, the court imposed a daily fine of $150.00, beginning March 8, 1988, and payable until Powers complied with the order to name his source.
After being held in contempt, Powers appealed to this court. He contended that the district court should have adopted a "confidential-informant-in-litigation" privilege and also contended that the district judge abused his discretion because he ordered disclosure of Powers' source without determining there was a need for the information. Powers v. Chicago Transit Authority, et al., 846 F.2d 1139 (7th Cir. 1988) (Powers I). On May 24, 1988, this court dismissed Powers' claim for lack of jurisdiction. We held that the district court's civil contempt order was not an appealable "final decision" under 28 U.S.C. § 1291. Id. at 1141.
Initially, Powers made only sporadic payments of his fines. Eventually, he stopped paying them altogether. On June 8, 1988, the district court held a hearing to address Powers' refusal to comply with both the order to disclose and the order to pay fines. Noting that the fines appeared to have lost all coercive effect, the district court suggested the option of dismissing Powers' lawsuit unless Powers complied with the disclosure order by a certain date. On July 5, 1988, the district court stopped the further accrual of fines, and ordered that unless Powers complied with the disclosure order and the order to pay fines by July 12, 1988, his suit would be dismissed. Powers refused to comply in either respect. On July 13, 1988, the district court dismissed Powers' suit. For the reasons discussed below, we affirm the district court's dismissal but reduce the amount of fines that Powers must pay. Appropriateness of the Order to Reveal Powers' Source
Powers contends that the district court should not have required him to identify the person that gave him the Hughes memorandum because the identity of his source is not relevant. The district court's disclosure order was made pursuant to its duty during discovery to regulate the exchange of information between the parties. The manner of discovery is committed to the broad discretion of the district court. United States v. DeFrantz, 708 F.2d 310, 311 (7th Cir. 1983); Eggleston v. Chicago Journeymen Plumbers' Local Union No. 130, 657 F.2d 890, 902 (7th Cir. 1981), cert. denied, 455 U.S. 1017, 102 S. Ct. 1710, 72 L. Ed. 2d 134 (1982). Rulings on evidentiary matters, such as relevancy, also fall within the broad discretion of the district court. See Coates v. Johnson & Johnson, 756 F.2d 524, 549 (7th Cir. 1985); Douglass v. Hustler Magazine, 769 F.2d 1128, 1142 (7th Cir. 1985). Because we ...