Sorry about the lack of new articles last week, but there just weren’t any interesting decisions to write about. But Judge Michael M. Baylson (E.D. Pa.) sure has put an end to that dry spell in the Cigna securities class action. In a fascinating opinion evaluating whether Lead Plaintiff has to reveal the names of their confidential witnesses cited in their complaint, Judge Baylson recognized that "confidential informants play a decidedly important role in many areas of public life. They are essential to the craft of espionage, and there are many books revealing the valuable role which confidential information has played in enabling our country to survive numerous wars. In the field of law enforcement, confidential informants are, of course, heavily relied upon by police and other law enforcement agents to detect everything from drug dealing to kidnapping to solving gruesome murders. The role of confidential informants in providing information to the press has recently been under great attention with regard to the so-called "CIA leak case" in which the Court of Appeals for the District of Columbia Circuit upheld a special prosecutor's subpoena requiring Judith Miller, a reporter for the New York Times, to testify about her sources. In refusing to obey this order, Ms. Miller spent several weeks in prison but eventually testified."
Judge Baylson continued, "of course, the recent identification of "Deep Throat," whose provision of information to the Washington Post led to the infamous Watergate scandal, also reminds us of the value of the free flow of information in a democratic society without fear of disclosure or retribution. However, as the DC Circuit's decision in the case of Judith Miller shows, the ability to avoid disclosing a confidential informant is not absolute; in most instances there is indeed a balancing test. How should the optimal balance be determined in this case?"
Well, keeping in mind that "there seems to be little public policy to support the Court requiring Lead Plaintiff to disclose its confidential informants in this case," "the Court concludes that requiring specific identification of confidential sources from among the universe of individuals with relevant knowledge in a securities fraud case would chill informants from providing critical information which may end up being in the public eye," therefore "Plaintiff should not be put under any compulsion to disclose the specific identity of its confidential informants."
You can read In re Cigna, issued January 31, 2006, here (many thanks to Adam T. Savett at Mehri & Skalet for the link), or at 2006 U.S. Dist. LEXIS 3864.
Nugget: "Fairness compels only that if an individual who is a confidential informant does have relevant information, that person's identity should be disclosed as a discoverable matter, but without disclosing that he or she is a confidential informant."