PUBLIC CITIZEN, INC., et al., Appellants, v. William E. SIMON, Secretary of the Treasury, Appellee.
No. 74-2025.
United States Court of Appeals, District of Columbia Circuit.
Argued Oct. 21, 1975. Decided June 25, 1976.
211
Having found the documents necessary, I invited respondents to propose the treatment to be accorded them. Their responses were submitted and accepted in my March 20, 1974, order. If something less could have satisfied complaint counsel‘s needs, it was incumbent upon respondents to propose it. Not having done so it ill becomes them to complain that I failed to allow some alternative to full disclosure. (J.A. 300).
We see no abuse of discretion in limiting the disclosure of the individual brand cost data to counsel of record. Although this Court has previously commented that there may be some distinction between disclosure of trade secrets to house counsel, and outside counsel,16 we find no abuse of discretion in refusing to limit such disclosure in this case. In order to protect trade secrets, district courts have required appropriate protection as a precondition to enforcement of FTC subpoenas. See, e. g., FTC v. St. Regis Paper Co., 304 F.2d 731, 732 n. 1 (7th Cir. 1962); Graber Mfg. Co. v. Dixon, 223 F.Supp. 1020 (D.C.D.C.1963); FTC v. Bowman, 149 F.Supp. 624 (N.D.Ill.), aff‘d, 248 F.2d 456 (7th Cir. 1957); FTC v. Minzies, 145 F.Supp. 164, 171 (D.Md.1956), aff‘d 242 F.2d 81, 84 (4th Cir.), cert. denied, 353 U.S. 957, 77 S.Ct. 863, 1 L.Ed.2d 908 (1957). The decision as to the type and scope of any protective order rests within the sound discretion of the trial judge and must be determined on a case by case basis.17 There is nothing in this record which would support a determination that the district court abused its discretion by its adoption of the protective order issued by the Administrative Law Judge.
The decision of the district court is affirmed.
Judgment accordingly.
David J. Anderson, Atty., Dept. of Justice, Washington, D. C., with whom Carla A. Hills, Asst. Atty. Gen., New York City, at the time the brief was filed, Earl J. Silbert, U. S. Atty., and Leonard Schaitman, Atty., Dept. of Justice, Washington, D. C., were on the brief for appellee. Morton Hollander, Atty., Dept. of Justice, Washington, D. C., also entered an appearance for appellee.
Before LEVENTHAL and MacKINNON, Circuit Judges and McMILLAN,* United States District Judge for the Western District of North Carolina.
Opinion for the Court filed by Circuit Judge LEVENTHAL.
Dissenting opinion filed by District Judge McMILLAN.
LEVENTHAL, Circuit Judge:
This appeal raises the question whеther taxpayers have standing as taxpayers, without congressional authorization of their suit, to challenge executive spending claimed to be in derogation of constitutional and statutory strictures. The District Court deemed the action barred by United States v. Richardson, 418 U.S. 166, 94 S.Ct. 2940, 41 L.Ed.2d 678 (1974), and Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974). We agree.
I. PARTIES AND PROCEEDINGS BELOW
Appellants are a taxpaying non-profit organization supported by contributions and a prominent taxpayer-public causes advocate. They allege injury as taxpayers.1 Their action is brought against the Secretary of the Treasury, sued in his official capacity. Appellants sеek declaratory and injunctive relief to require appellee “to take appropriate action to recover all salaries paid to persons on the White House Staff while they were devoting substantially all of their working time to the 1972 Presidential election campaign, rather than to the official business for which their positions are authorized.”2 Asserting that Congress has made
On November 14, 1972 appellants instituted this action in District Court. Shortly after the filing of the complaint, appellee moved to dismiss for lack of standing. The District Court denied the motion without opinion on March 8, 1973. Appellants then proceeded to take discovery. Following the conclusion of discovery, appellee renewed his motion to dismiss, which the District Court granted on September 27, 1974. This appeal followed.
II. SUPREME COURT PRECEDENTS ON TAXPAYER STANDING
Appellants hinge their standing to sue on a proposed extension of Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968), to permit taxpayer challenges to executive spending. In Flast the Court modified the doctrine of standing which, since Frothingham v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078 (1923), had barred suits by federal taxpayers to enjoin allegedly unconstitutional expenditures. Flast, in turn, has been accorded a restrictive reading in the recent decisions of United States v. Richardson, 418 U.S. 166, 94 S.Ct. 2940, 41 L.Ed.2d 678 (1974), and Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974). The viability of appellants’ proposed extension turns on an appreciation of this doctrinal development, which we now set forth.
Frothingham, involving a Tenth Amendment challenge to federal legislation providing grants to the States for participation in programs to reduce infant and maternal mortality, erected what appeared to at the time to be an absolute barrier to federal taxpayer suits. It did so on a rationale which, although interlaced with non-constitutional policy considerations, was grounded in the Article III concept that the federal judicial power may be invoked only in a genuine “case or controversy.” The Court held that a federal taxpayer, unlike his state counterpart, has a “comparatively minute and indeterminable interest” in the moneys of the Treasury, such that injury to him occasioned by obnoxious legislatiоn is indistinguishable from that suffered by the general public. To permit such suits, the Court feared, would expose to taxpayer challenge every appropriation act whose administration requires the outlay of money, and would thrust the Judiciary into conflict with the other branches of government without the direct, particularized harm that
Frothingham remained undisturbed for forty-five years. It generated considerable confusion as to whether it stated a constitutional requirement for Article III standing or simply a policy of judicial self-restraint.7 Reexamination finally came in Flast, which involved a challenge to а federal statute providing disbursement of federal funds to finance secular instruction in religious schools. The Court, per Chief Justice Warren, phrased the issue before it as “whether the Frothingham barrier should be lowered when a taxpayer attacks a federal statute on the ground that it violates the Establishment and Free Exercise Clauses of the First Amendment.”8
Flast answered some of the questions raised by Frothingham. It made clear that Article III is not an absolute barrier to taxpayer actions, that the question of standing relates to whether one is “a proper party to maintain the action” and “does not, by its own force, raise separation of powers problems related to improper judicial interference in areas committed to other branches of the Federal Government.”9 Whether taxpayers have standing to challenge the constitutionality of a federal spending program becomes a question of whether “they can demonstrate the necessary stake as taxpayers in the outcome of the litigation to satisfy Article III requirements.” This, in turn, requires satisfaction of a two-pronged test:
First, the taxpayer must establish a logical link between that status and the type of legislative enactment attacked. Thus, a taxpayer will be a proper party to allege the unconstitutionality only of exercises of congressional power under the taxing and spending clause of
The Court found the first prong satisfied because the challenge was to an exercise by Congress of its spending power, its power under Article I, § 8 “to pay the Debts and provide for the . . . general Welfarе of the United States,” and because the challenged program involved a substantial11 expenditure of federal tax funds. It found the second prong satisfied by the allegation that the challenged expenditures violated the Establishment Clause, in light of the Court‘s gloss on the history of the clause as having been adopted as “a specific bulwark” against the government‘s employment of its taxing and spending power in
Although Flast‘s criteria for taxpayer standing have been subjected to considerable criticism for failing to provide a measurement of the adverse interest of a plaintiff in the outcome,14 the “nexus” test did restrict the range of taxpayer actions.15 It avoided the spectre raised by Frothingham of taxpayer use of “a federal court as a forum in which to air his generalized grievances about the conduct of government or the allocation of power in the Federal System.”16 The Court‘s 1974 opinions establish the continuing vitality of the Frothingham barrier to taxpayer actions and the limited breach effected by Flast, by declining to recognize taxpayer standing in cases not satisfying the literal terms of the Flast “nexus” test.17
In Richardson a taxpayer claimed that a statute authorizing the refusal of the Executive Branch to reveal expenditures of the Central Intelligence Agency (CIA) violated the Statement and Account Clause of the Constitution.18 The Court denied standing because the taxpayer‘s “challenge is not addressed to the taxing and spending power, but to the statutes regulating the CIA,” and he makes “no claim that appropriated funds are being spent in violation of a ‘specific constitutionаl limitation upon the taxing and spending power . . . .‘”19 With the conditions of Flast not met, the Court deemed the challenge a “generalized grievance” not entitled to invocation of judicial power because of the absence of “any particular concrete injury.”20
Schlesinger was a challenge to executive conduct by a group of anti-war activists who, as citizens and taxpayers, argued that the Pentagon policy which allows members of Congress to retain their status in the Armed Forces Reserves is prohibited by the Incompatibility Clause of the Constitution.21 The Court held that plaintiffs “did not chal-
III. THE ISSUE WHETHER EXECUTIVE SPENDING IS SUBJECT TO TAXPAYER SUIT ON A TEST ANALOGOUS TO Flast
The District Court held appellants failed to come within Flast because their challenge is to the conduct of the executive branch, and the constitutional provision they invoke is not a specific limitation on the congressional taxing and spending power.24
Appellants argue that Flast did not announce an exclusive test for all taxpayer suits but merely stated the requirements for such challenges to legislative enactments, and that challenges to executive spending may be posited on an analogous test. Appellants’ formulation modifies the languagе of the Flast “nexuses” to require a taxpayer in an “executive spending” case to (1) “establish a logical link between that status and the type of [executive action] attacked,” in that the challenge must be directed at executive spending rather than regulatory action involving incidental expenditures; and (2) “show that the chal-
Appellants’ proposed test cannot stand in light of Richardson and Schlesinger, which presented clear invitations to extend Flast by analogy in order to broaden the availability of “public actions” by taxpayers to enforce the general mandates of the Constitution. Instead, the Court expressly declined the opportunity to lower the Frothingham barrier except for actions that could clear the hurdles set by the express terms of the Flast “nexus” test.
The challenge in Richardson to the non-disclosure of CIA expenditures was, in the view of the Third Circuit, “integrally related” to taxpayer ability to challenge the CIA appropriations themselves, and this consideration persuaded it to fashion an analogous test for taxpayer actions seeking dis-
The action in Schlesinger bears certain similarities to the instant case. Althоugh the primary thrust of the anti-war activists’ challenge was to prevent the conflict of interest potential inhering in the dual status of Reservist-Congressman, it also raised the issue of executive spending in violation of the Incompatibility Clause. And even though plaintiffs there requested the District Court to direct the Secretary of Defense to reclaim Reserve pay received by Reservist members of Congress, the majority opinion of Chief Justice Burger ruled that “[s]uch relief would follow from the invalidity of Executive action in paying persons who could not lawfully have been reservists, not from the invalidity of the statutes authorizing pay to thosе who lawfully were reservists.” 418 U.S. at 228 n. 17, 94 S.Ct. at 2936. That the Schlesinger challenge failed because it was directed at executive conduct is made clear by Justice Stewart, who dissented in Richardson but agreed there could be no taxpayer standing in the Reservist Congressmen case “since there is simply no challenge to an exercise of the taxing and spending power.” Id. at 229, 94 S.Ct. at 2936.
Appellants urge that Richardson and Schlesinger are distinguishable. They maintain that Richardson was not a challenge to spending but rather to the regulation, by statute, permitting nondisclosure of CIA expenditures, and that the primary aim of the suit in Schlesinger was to vindicate the essentially regulatory purposes of the Incompatibility Clause. Although these distinctions are not without some force,27 classification of particular challenges as between “executive spending” and “executive regulatory action” is a more elusive enterprise than might appear at first glance. For example, appellants’ challenge can be characterized as regulatory in aim—to compel an accounting by White House officials of the time spent on campaigning as opposed to official duties—and the “executive spending” on the salaries of the White House Staff members merely an incidental feature.
Passing by the issue of nomenclature, appellants’ analogous test for executive spending would ignore the clear thrust of the Richardson and Schlesinger decisions to accord Flast a viability restricted to its express terms. And the fair implication of appellants’ position is to recognize taxpayer standing to attack any executive action that draws on an outstanding appropriation on the ground that the purchases or services are not in accord with the congressional intent in passing the appropriation. This would place the judiciary in the role of management overseer of the Executive Branch. Such oversight is a function of Congress. Taxpayer standing here would bring into play the separation of powers cоncern pervading Frothingham, Richardson and Schlesinger.
Appellants’ final argument is that if they are not granted standing, the constitutional violation alleged will go unremedied and the funds diverted to the Nixon re-election campaign will never be recouped.28 We need not consider whether there is a “better plaintiff” than a taxpayer to maintain the instant challenge. If not, the taxpayer‘s claim is still barred. In Richardson the Court rejected this factor as a basis for
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This is an area of the law where the result is clear, in view of the cases, but there is less clarity in the doctrinal development. What was wrought by the Flast opinion—in opening the door to taxpayer actions, yet opening it only part way—was pragmatic in result, avoiding the flood of all manner of taxpayer actions. And yet it was rooted in a conceptual underpinning, permitting federal taxpayer standing in a class of cases where taxpayer suits were particularly appropriate and manageable—specifically, in cases involving the validity of taxing and appropriation statutes (as distinguished from cases involving “incidental expenditure[s] of tax funds in the administration of an essentially regulatory statute“). The impact on federal taxpayers in such cases is conceptually direct, even though the dollar-and-cents consequence for a taxpayer is minimal. The doctrine thus evolved for federal taxpayers reflects considerations similar to those developed by the Court in the “good-faith pocketbook action” limitation on state taxpayer standing in the Supreme Court.30
Appellants’ proposal to open the Flast door another arc is an attempt to build on the premise that they can claim the same dollars-and-cents impact as Flast. That is a necessary but not sufficient aspect of Flast. What appellants lack is what Flast found in the case of taxing and appropriations statutes—measures which in their very nature are directed toward taxpayers as a class. When what is involved is expenditures in implementation of a regulatory statute, or mere executive activity that entails some expenditures,31 there is no similar arrow
The District Court‘s grant of appellee‘s motion to dismiss is
Affirmed.
MCMILLAN, District Judge (dissenting):
The plaintiffs in this case have, in my opinion, “alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness . . . upon which the court so largely depends for illumination of difficult constitutional questions,” and have therefore alleged the “gist of the question of standing,” Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1967). In addition, one plaintiff at least is noted for his tenacity and perspicacity in the pursuit of public interest cases. A live “case or controversy” exists.
This case is unlike Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974), because it attacks directly a misuse of funds by executive officers rather than executive action like that challenged in Schlesinger, supra, which did not directly call for spending public funds but merely continued in effect a military reserve status for legislators.
This case is unlike United States v. Richardson, 418 U.S. 166, 94 S.Ct. 2940, 41 L.Ed.2d 678 (1974), because Richardson did not attack executive spending at all, but sought to require the Executive to make more meaningful reports on CIA operations.
This case is unlike both Reservists and Richardson because it alleges that defendants’ use of tax money for political purposes runs counter to concrete prohibitions in
“Standing” requirements have already done much to close the door of the federal court house to citizen complaints about government operations; and I would not add any unnecessary impetus to that closing, unless existing controlling authority absolutely requires such a result. Though Richardson and Reservists might inferentially support a denial of standing, they do not in my opinion require such a result. I would not dismiss for lack of standing, but would uphold standing based upon the considerations set out above, and on those expressed in Mr. Justice Brennan‘s dissenting opinion in Reservists, 418 U.S. 208, 355, 94 S.Ct. 2925, 41 L.Ed.2d 706.
It is true that many federal employees are exempt from the Hatch Act, and that some of the defendants may come under the exemption covering employees whose salaries are paid out of the “appropriation for the office of the President” under
In summary, I would find that plaintiffs have standing to bring the suit and that the case should be decided on the merits in favor of those defendants who may be covered by the express exemptions under