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JACKSON v. FIRST FED. SAV. OF ARKANSAS

January 13, 1989

EMILY JOY JACKSON, PLAINTIFF,
v.
FIRST FEDERAL SAVINGS OF ARKANSAS, F.A., DEFENDANT



The opinion of the court was delivered by: EISELE

 GARNETT THOMAS EISELE, CHIEF UNITED STATES DISTRICT JUDGE

 This is a securities fraud case brought against a federal savings and loan association and several of its officers by some of its stockholders. Now pending before the Court is a procedurally unusual dispute over plaintiff's access to documents in the hands of a federal agency, and a motion to strike. The motions will be addressed in that order.

 I. DISCOVERY MOTION

 A. Facts

 In plaintiff's amended first request for production of documents, Request Number 10, she asked defendants for "all documents relating to Federal Home Loan Bank Board ["Bank Board"] examinations of First Federal or its predecessors during the relevant time period and to the present time." Defendants objected solely on the basis that

 
the requested documents are the property of the [Bank Board] and are furnished to the examined savings and loan for its confidential use. The applicable rules and regulations of the [Bank Board] provide that under no circumstances shall the savings and loan, or any of its directors, officers or employees, disclose or make public in any manner the requested documents or any portion thereof. . . . In light of the express prohibition set forth in Part 505 of the General Regulations of the [Bank Board], the Defendants OBJECT to the production of the materials sought in Request for Production of Documents No. 10.

 Defendants have filed objections to the protective order, and to the Bank Board's decision to give plaintiff the documents. Although their objection to Request Number 10 was based entirely on Bank Board regulations, defendants find these regulations less compelling when they authorize the disclosure plaintiff has requested. Now defendants argue that disclosure is barred by the Trade Secrets Act, 18 U.S.C. § 1905. In other words, defendants contend that disclosure of the requested documents to plaintiff by the defendants is prohibited by Bank Board regulations, and that disclosure of the documents to plaintiff by the Bank Board under those same regulations is prohibited by the Trade Secrets Act. Both plaintiffs and the Bank Board (via an amicus brief) have responded in opposition to those objections.

 B. Analysis

 The issues raised in defendants' papers may be conveniently grouped and considered as follows: (1) Whether plaintiff's request to the Bank Board was improper. (2) A review of the applicable statutes and regulation. (3) Whether Regulation 505 is lawful authority for release of otherwise protected information. (4) Whether the Bank Board's decision to release certain documents to plaintiff is erroneous or otherwise incorrect. (5) Whether the protective order should be entered.

 1. Was the Inquiry Improper ?

 In their filings on the disclosure issue, defendants have advanced various reasons why they think it was improper for plaintiff to approach the Bank Board via an FOIA request, rather than through discovery. On the one hand, defendants contend that the request violated a stay of discovery entered into by the parties pending resolution of defendants' motions to dismiss. On the other hand, defendants also complain that plaintiff has attempted to obtain relevant documents outside the channels of formal discovery and, consequently, without notice to defendants. Perhaps defendants advance a compound argument, that plaintiff should only have sought information through formal discovery, and that she should not have done any discovery because of the stay. In any event, defendants' arguments do not persuade the Court that anything improper has been done.

 First of all, and leaving aside the special nature of the documents sought and of the entity holding them, there is no rule that the parties to a lawsuit may only gather evidence through the formal discovery devices created by the federal rules of civil procedure. If the individual or agency in possession of desired documents will provide access to them without resort to a subpoena or other Court backed discovery mechanisms, it is ordinarily unnecessary for the party seeking the material to take steps to compel what will be given freely. Nor is it required that one party give notice to other parties that evidence gathering outside the discovery process is being undertaken. To the extent defendants complain that plaintiff sought to obtain evidence other than through discovery, and without notice to defendants, their complaints are not well founded.

 2. Applicable Law

 Defendants' objection on the merits rests on two statutes and a regulation. The statutes are the Trade Secrets Act, 18 U.S.C. § 1905 ("Section 1905") and the Freedom of Information Act, 5 U.S.C. § 552 ("FOIA"). The regulation is the Bank Board's regulation for disclosure ...


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