(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interests of brevity, portions of any opinion may not have been summarized).
Argued May 1, 2000 -- Decided July 26, 2000
LONG, J., writing for a unanimous Court.
The issue addressed by the Court is whether confidentiality claims and privileges may preclude or limit
discovery of documents characterized by the New Jersey Commissioner of Insurance (Commissioner) as deliberative
in nature.
In December 1986, the Superior Court, Chancery Division entered an order declaring Integrity Insurance
Company (Integrity) to be insolvent. At the time, Integrity was a property and casualty insurer licensed to transact
business in every state. The Chancery court directed the rehabilitation of Integrity and appointed the Commissioner
and his statutory successors in office as rehabilitators. In March 1987, the court ordered Integrity into liquidation,
and appointed the Commissioner as liquidator pursuant to New Jersey's version of the Uniform Insurers Liquidation
Act (ULA). The Commissioner was directed to marshal Integrity's assets and liquidate its liabilities for the benefit
of all claimants against the estate.
On June 17, 1996, the Commissioner filed a Final Dividend Plan (FDP) with the court to effect the early
termination of the Integrity estate. As drafted, the FDP will require Integrity's reinsurers to pay off approximately
$800 million dollars of debt. Munich Reinsurance Company (Munich) and other reinsurers oppose the FDP
submitted by the Commissioner for approval.
During discovery, the Commissioner refused to produce certain documents that Munich requested, claiming
they were protected from discovery by the deliberative process privilege, the work product privilege, or a
combination of the two. The deliberative process privilege permits the government to withhold documents that
reflect advisory opinions, recommendations, and deliberations regarding the process of formulating governmental
decisions and policies. The trial court held that there is a deliberative process privilege in New Jersey for inter- or
intra-agency communications, but that when the Commissioner is acting as liquidator, he or she is not functioning as
a government official and, therefore, is not subject to the privilege. The court concluded that when the
Commissioner functions as liquidator under the ULA, he or she steps into the shoes of the insolvent insurance
company and, therefore, cannot assert the deliberative process privilege.
On leave to appeal granted, the Appellate Division held that although deliberative process materials may
not always be discoverable, no such qualified privilege exists. The court went on to conclude, however, that the
Commissioner acts in a public capacity as a liquidator and can invoke New Jersey Rule of Evidence (N.J.R.E.) 515
to protect official information of the State. The Appellate Division remanded the matter for an in camera hearing to
determine whether the documents the Commissioner seeks to protect are relevant and, if so, whether they nonetheless
may be withheld from disclosure pursuant to N.J.R.E. 515.
The Supreme Court granted the Commissioner's motion for leave to appeal.
HELD: The deliberative process privilege exists in New Jersey; it is separate and distinct from N.J.R.E. 515.
Because of the Commissioner's hybrid status as liquidator, the deliberative process privilege cannot be
invoked to preclude discovery of relevant documents.
1. The documents underlying the Commissioner's decision regarding the FDP are plainly relevant to the reinsurers'
challenge to the extent that they pertain to the appropriateness of the FDP, and to the Commissioner's exercise of her
fiduciary obligation to Integrity's creditors, or are likely to lead to admissible evidence on those subjects. The
Commissioner claims that the Court declared the existence of the deliberative process privilege in McClain v.
College Hosp. and that it applies to these documents, precluding their discovery. (Pp. 6-11)
2. The Court is satisfied that the intent of McClain was to establish a qualified privilege for governmental
deliberative process materials. Under that privilege, the initial burden falls on the State agency to demonstrate that
the documents it seeks to shield are pre-decisional and deliberative in nature (containing opinions, recommendations,
or advice regarding agency policies). Once the deliberative nature of the documents is established, there is a
presumption against disclosure. The burden shifts to the party seeking disclosure to show that his or her compelling
or substantial need for disclosure outweighs the government's interest in non-disclosure. Factors to consider are the
importance of the evidence to the movant, its availability from other sources, and the effect of disclosure on frank
and independent discussion of contemplated governmental policies. (Pp. 11-16)
3. The deliberative process privilege is inapplicable if the person asserting it is not performing a governmental
function. The Commissioner functions in a hybrid status, part public and part private, when he or she oversees the
liquidation of an insolvent insurer. Thus, the deliberative process privilege is inapplicable. Nonetheless, neither
discovery nor confidentiality will be presumed. The State must establish the deliberative nature of the documents
and, thereafter, each side will advance its claims (for either confidentiality or disclosure). The trial court must then
engage, after an in camera review of the documents, in a balancing process to determine whether, and under what
circumstances, disclosure of sensitive documents should be ordered. In striking the balance, the court may utilize
available discovery limiting tools, including protective orders, sealing, and redaction. (Pp. 16-22)
4. The deliberative process privilege and N.J.R.E. 515 are not interchangeable. The basic difference between the
two is the N.J.R.E. 515 protects facts from disclosure whereas the deliberative process privilege protects opinions.
Although the Commissioner has not invoked N.J.R.E. 515, her hybrid status informs the inquiry if she does so. The
information pertaining to the FDP and liquidation is not “official information” of the State. Hence, the
Commissioner may not claim the insulation of liquidation related facts by invoking N.J.R.E. 515. As in the case of
the deliberative process privilege, if the Commissioner seeks the protection of N.J.R.E. 515, the reinsurers may
counter with the need for disclosure and the trial court will be required to balance those interests. (Pp. 22-24)
Judgment of the Appellate Division is AFFIRMED in part, REVERSED in part, and the matter is
REMANDED to the Law Division to undertake proceedings consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES O'HERN, STEIN, COLEMAN and VERNIERO join in
JUSTICE LONG'S opinion. JUSTICE LAVECCHIA did not participate.
SUPREME COURT OF NEW JERSEY
A-72/
102 September Term 1999
IN THE MATTER OF THE
LIQUIDATION OF INTEGRITY
INSURANCE COMPANY
Argued May 1, 2000 -- Decided July 26, 2000
On appeal from the Superior Court, Appellate
Division, whose opinion is reported at
321 N.J. Super. 399 (1999).
Michael E. Goldman, Deputy Attorney General,
argued the cause for appellant and cross
respondent Commissioner of Banking and
Insurance, (John J. Farmer, Jr., Attorney
General of New Jersey, attorney and Sills
Cummis Radin, Special Counsel, attorneys;
Nancy Kaplen, Assistant Attorney General, of
counsel; Mr. Goldman, Thalia P. Cosmos,
Deputy Attorney General, Steven S. Radin,
Thomas S. Novak and Steven M. Ziolkowski, on
the briefs).
David M. Spector, a member of the Illinois
bar, argued the cause for respondent and
cross-appellant Munich Reinsurance Company,
(Winne, Banta, Rizzi, Hetherington &
Basralian, attorneys; Mr. Spector, Donald A.
Klein and Brian J. Neff, of counsel and on
the briefs).
The opinion of the court was delivered by
LONG, J.
In this case we are required to determine the nature and
extent of the pretrial discovery to which the creditors of an
insolvent insurer are entitled as against the Commissioner of
Insurance (Commissioner) acting as liquidator. More
specifically, the issue to be addressed is whether
confidentiality claims and privilege may preclude or limit
discovery of documents characterized by the Commissioner as
deliberative in nature.
In December 1986, the Superior Court, Chancery Division entered an order declaring Integrity to be insolvent. The court directed the rehabilitation of Integrity and appointed the New Jersey Commissioner of Insurance and his statutory successors in office as rehabilitators. On March 27, 1987, the court ordered Integrity into liquidation, and appointed the Commissioner as liquidator pursuant to N.J.S.A. 17:30C-9. The Commissioner was directed to marshal Integrity's assets and liquidate its liabilities for the benefit of all claimants against its estate. On June 17, 1996, the Commissioner filed a Final Dividend Plan (FDP) with the court to effect the early termination of the Integrity estate. That novel plan to wind up Integrity's affairs essentially reduced the actuarial estimates of Integrity's future liabilities to present value. Briefly summarized, under the FDP, the liquidator was to
(1) estimate and allow the present value of all Contingent Claims, including claims for IBNRSee footnote 11 losses; (2) collect from reinsurers the present value of any reinsurance that will be due on such claims; (3) arrive at a final determination of Integrity's assets and liabilities; (4) calculate the percentage to be paid on the Fourth Priority [policyholder] claims; and (5) pay a final dividend on all claims accorded Fourth Priority or higher status.
The FDP will require Integrity's reinsurers to pay off
approximately $800 million dollars of debt.
Munich Reinsurance Company (Munich) and other reinsurers
oppose the FDP that has been submitted to the court for approval.
During discovery, the Commissioner refused to produce certain
documents that Munich requested. The Commissioner prepared a
“privilege log” listing and describing over 100 documents with
respect to which she asserted the deliberative process privilege,
the work product privilege, or a combination of the two. The
work product and attorney client privileges are not at issue on
this appeal. According to the Commissioner, the documents fall
into four general categories:
(1) Correspondence summarizing the issues raised and the
discussion of those issues that occurred at the monthly
status meeting with staff members;
(2) Departmental memoranda and other correspondence
relative to issues discussed or to be discussed at the
monthly status meeting;
(3) Departmental memoranda discussing, referencing or
suggesting advice of counsel litigation strategy and/or
potential policy decisions;
(4) Reports of management/administrative studies of
Integrity prepared by independent consultants.
The trial court held that there is a deliberative process
privilege in New Jersey for inter- or intra-agency
communications, but that when the Commissioner is acting as
liquidator he or she is not functioning as a government official
and, therefore, is not subject to the privilege. In reaching
that result, the court observed that the FDP describes the
liquidator as “[t]he New Jersey Commissioner of Insurance, acting
solely in the capacity of receiver, not as regulator, . . .” and
that a number of states, including New Jersey, that have adopted
the Uniform Insurers Liquidation Act in whole or part, have
recognized that a state insurance commissioner is not acting as a
government regulator when serving in the capacity of liquidator.
According to the trial court, the Commissioner, functioning as
liquidator, “for all intents and purposes slips into the shoes of
the insolvent insurance company,” and cannot assert the
deliberative process privilege.
By leave granted, the Commissioner appealed. The Appellate
Division, citing McClain v. College Hosp.,
99 N.J. 346, 353
(1985), held that although deliberative process materials may not
always be discoverable, “no such qualified privilege exists.” In
re Liquidation of Integrity Ins. Co.,
321 N.J. Super. 399, 415
(App. Div. 1999). The court went on to conclude, however, that
the Commissioner acts in a public capacity as a liquidator and
can invoke N.J.R.E. 515 to protect official information of the
State. Thus, it remanded the case for an in camera hearing to
determine whether the documents the Commissioner seeks to protect
are relevant and, if so, whether they nonetheless may be withheld
from disclosure pursuant to N.J.R.E. 515. Id. at 416-19.
The Commissioner moved for leave to appeal and we granted
the motion.
163 N.J. 70 (2000). The Commissioner asks that we
declare that a deliberative process privilege exists in New
Jersey and that it is entirely distinct from N.J.R.E. 515, which
the Commissioner has not invoked in this case.
To determine whether the materials sought by the reinsurers are discoverable, their potential relevance is the initial inquiry. In deciding whether evidence is relevant the focus is on the “logical connection between the proffered evidence and a fact in issue[.]” State v. Hutchins, 241 N.J. Super. 353, 358 (App. Div. 1990). N.J.R.E. 401 defines relevant evidence as “evidence having a tendency in reason to prove or disprove any fact of consequence to the determination of the action.”
Performing her role as a liquidator, the Commissioner is governed by N.J.S.A. 17:30C-1 to -31, New Jersey's version of the Uniform Insurers Liquidation Act (ULA or Act). Under the Act, in crafting an FDP, the Commissioner is required to weigh all interests and to perform a fair and efficient liquidation of the insolvent company. In re Liquidation of Integrity Ins. Co., 231 N.J. Super. 152, 157 (Ch. Div. 1988). The Commissioner is subject to a fiduciary obligation to all creditors of the insolvent company. Ibid.
Thus, the documents underlying the Commissioner's decision regarding the FDP are plainly relevant to the reinsurers' challenge to the extent that they pertain to the fairness and feasibility of the plan, and to the Commissioner's exercise of her fiduciary obligation to all of Integrity's creditors, or are likely to lead to admissible evidence on those subjects. Although relevance creates a presumption of discoverability, confidentiality may be maintained if an evidentiary privilege exists. Payton, supra, 148 N.J. at 539. “A privilege reflects a societal judgment that the need for confidentiality outweighs the need for disclosure.” Ibid. (citing Hague v. Williams, 37 N.J. 328, 355 (1962)). The Commissioner contends that the deliberative process privilege shields the documents sought by the reinsurers.
Free and open comments on the advantages and disadvantages of a proposed course of governmental management would be adversely affected if the civil servant or executive assistant were compelled by publicity to bear the blame for errors or bad judgment properly chargeable to the responsible individual with power to decide and act. Government from its nature has necessarily been granted a certain freedom from control beyond that given the citizen. It is true that it now submits itself to suit but it must retain privileges for the good all.
There is a policy involved in this claim
of privilege for this advisory opinion_the
policy of open, frank discussion between
subordinate and chief concerning
administrative action.
The privilege and its rationale were subsequently adopted by the federal district courts and circuit courts of appeal. United States v. Farley, 11 F.3d 1385, 1389 (7th Cir. 1993); Federal Trade Comm'n v. Warner Communications, Inc., 742 F.2d 1156, 1161 (9th Cir. 1984); McClelland v. Andrus, 606 F.2d 1278, 1287 (D.C. Cir. 1979); SEC v. National Student Mktg. Corp., 538 F.2d 404, 406 (D.C. Cir. 1976), cert. denied, 429 U.S. 1073, 97 S. Ct. 809, 50 L. Ed.2d 790 (1977); ISI Corp. v. United States, 503 F.2d 558, 559 (9th Cir. 1974); Freeman v. Seligson, 405 F.2d 1326, 1339 (D.C. Cir. 1968); Olson Rug Co. v. NLRB, 291 F.2d 655, 661 (7th Cir. 1961); Scott v. PPG Indus., Inc., 142 F.R.D. 291, 292 (N.D. W. Va. 1992); Burka v. New York City Transit Auth., 110 F.R.D. 660, 667 (S.D.N.Y. 1986); Liuzzo v. United States, 508 F. Supp. 923, 937 (E.D. Mich. 1981); In re Franklin Nat'l Bank Sec. Litig., 478 F. Supp. 577, 580 (E.D.N.Y. 1979); EEOC v. Los Alamos Constructors, Inc., 382 F. Supp. 1373, 1379 (D.N.M. 1974); Black v. Sheraton Corp. of Am., 371 F. Supp. 97, 100 (D.D.C. 1974); Simons-Eastern Co. v. United States, 55 F.R.D. 88, 88-89 (N.D. Ga. 1972).
A document must meet two requirements for the deliberative process privilege to apply. First, it must have been generated before the adoption of an agency's policy or decision. In other words, it must be pre-decisional. Coastal States Gas Corp. v. Department of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980). Second, the document must be deliberative in nature, containing opinions, recommendations, or advice about agency policies. Ibid. Purely factual material that does not reflect deliberative processes is not protected. Environmental Protection Agency v. Mink, 410 U.S. 73, 88, 93 S. Ct. 827, 837, 35 L. Ed.2d 119, 132 (1973), superseded by statute on other grounds noted by, Zweibon v. Mitchell, 516 F.2d 594, 642 (D.C. Cir. 1975). Once the government demonstrates that the subject materials meet those threshold requirements, the privilege comes into play. In such circumstances, the government's interest in candor is the “preponderating policy” and, prior to considering specific questions of application, the balance is said to have been struck in favor of non-disclosure. Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, 40 F.R.D. 318, 324 (D.C. Cir. 1966); Sprague Elec. Co. v. United States, 462 F. Supp. 966, 974 (Cust. Ct. 1978).
Despite the existence of the privilege, with its concomitant presumption against disclosure, a litigant may obtain deliberative process materials if his or her need for the materials and the need for accurate fact-finding override the government's significant interest in non-disclosure. Warner, supra, 742 F. 2d at 1161. As with any privilege, the party seeking such documents bears the burden of showing a substantial or compelling need for them. Deuterium Corp. v. United States, 4 Cl. Ct. 361, 364 (1984) (requiring compelling need); Scott, supra, 142 F.R.D. at 293 (same); Burka, supra, 110 F.R.D. at 663 (requiring substantial need).See footnote 22 “[I]n all but exceptional cases it is considered against the public interest to compel the government to produce inter-agency advisory opinions.” E.W. Bliss Co. v. United States, 203 F. Supp. 175, 176 (N.D. Ohio 1961). Under the federal cases, when determining whether a litigant has sustained the burden of overcoming the deliberative process privilege, factors to consider include: 1) the relevance of the evidence; 2) the availability of other evidence; 3) the government's role in the litigation; and 4) the extent to which disclosure would hinder frank and independent discussion regarding contemplated policies and decisions. Warner, supra, 742 F. 2d at 1161.
IV.
The Commissioner argues that we declared the existence of the deliberative process privilege in New Jersey in McClain, supra, 99 N.J. 346, and that that privilege is applicable here. In McClain, the plaintiff sought disclosure of documents relating to the State Board of Medical Examiners' investigation of a string of deaths that occurred at the New Jersey College of Medicine and Dentistry and College Hospital. Id. at 351. The plaintiff planned to use the Board's investigatory documents in a separate civil proceeding against a separate entity, the College Hospital. Ibid.
In McClain, we identified the considerations underlying the deliberative process privilege as declared in federal statutory and decisional law:
A full and free exchange of discourse would be hampered if the preliminary thought processes of agency members were bared. Again, this exemption has not been regarded as all-exclusive, and saying that the document is an intra-agency memorandum does not make it so.
In Environmental Protection Agency v. Mink, supra, 410 U.S. 73, 93 S. Ct. 827, 35 L. Ed.2d 119, the leading case construing the FOIA'sSee footnote 33 exemption for inter-agency or intra-agency memoranda, the Supreme Court distilled a commonsense, flexible rule from the legislative history and judicial opinions dealing with the privilege of executive agencies to withhold information from their adversaries, holding that the exemption authorized an agency to withhold materials reflecting deliberative or policy-making processes but required disclosure of purely factual, investigative matters.
Despite that important policy, in McClain we cautioned against “wooden” application of the notion of confidentiality. We stated that merely characterizing a document as deliberative is not dispositive and that withholding discoverable factual material by placing it in a deliberative document should not be countenanced. Id. at 360-61.
We determined,
that the initial focus must be upon the
nature of the materials sought. The
balancing process must be concretely focused
upon the relative interests of the parties in
relation to these specific materials. There
is a qualitative difference in the nature of
information that an investigative agency
acquires. Useful guidelines for the
determination of this balancing were stated
by the California Supreme Court:
Implicit in each assessment is a
consideration of consequences_i.e., the
consequences to the litigant of non
disclosure, and the consequences to the
public of disclosure. The consideration
of consequences to the litigant will
involve matters . . . including the
importance of the material sought to the
fair presentation of the litigant's
case, the availability of the material
to the litigant by other means, and the
effectiveness and relative difficulty of
such other means. The consideration of
the consequences of disclosure to the
public will involve matters relative to
the effect of disclosure upon the
integrity of public processes and
procedures.
This standard is . . . flexible and adaptable
to different circumstances and sensitive to
the fact that the requirements of
confidentiality are greater in some
situations than in others. The process has
been described as calling for an exquisite
weighing process by the trial judge. As the
considerations justifying confidentiality
become less relevant, a party asserting a
need for the materials will have a lesser
burden in showing justification. If the
reasons for maintaining confidentiality do
not apply at all in a given situation, or
apply only to an insignificant degree, the
party seeking disclosure should not be
required to demonstrate a compelling need.
[Id. at 361-62 (citations and quotations
omitted).]
Finally, we concluded that the Board's internal memorandum
was
entitled to a high degree of protection on
two grounds. First, it is an intra-agency
memorandum, entitled to confidentiality, and
second, it also presumably contains matters
of opinion in the committee's investigation
that may or may not have been acted upon by
the agency in its final deliberation and
conclusion. Again, we would expect that the
Court would apply the Mink rationale to
determine whether any of its contents is
strictly factual and would conclude that such
information would be reasonably available to
the plaintiff, excising matters of opinion or
conjecture on the part of the agency members.
Whether the need for its conclusory contents
is so compelling and the prejudice so great
due to their unavailability, will be for the
trial court to decide. We note that this is
not the final action of the Board and, as
such, is entitled to a high degree of
confidentiality.
To be sure, McClain never overtly declares the existence of a deliberative process privilege in those terms. However, it is crystal clear regarding the “high degree of protection” accorded to the government's pre-decisional deliberative documents containing advice, opinions, or recommendations. Ibid. Such documents, according to McClain, are confidential and require the party seeking discovery to show a “compelling” need to justify disclosure. Id. at 362. That is the same standard adopted in the federal cases that have explicitly recognized the privilege. Deuterium, supra, 4 Cl. Ct. at 364; Scott, supra, 142 F.R.D. at 293. We are satisfied that the intent of McClain was to establish a qualified privilege for governmental deliberative process materials because the government, like its citizens, “needs open but protected channels for the kind of plain talk that is essential to the quality of its functioning.” Carl Zeiss Stiftung, supra, 40 F.R.D. at 325. Although we have not had occasion to set out the exact contours of the privilege, certain procedural aspects of it are evident from McClain.
The initial burden falls on the state agency to show that the documents it seeks to shield are pre-decisional and deliberative in nature (containing opinions, recommendations, or advice about agency policies). Once the deliberative nature of the documents is established, there is a presumption against disclosure. The burden then falls on the party seeking discovery to show that his or her compelling or substantial need for the materials overrides the government's interest in non-disclosure. Among the considerations are the importance of the evidence to the movant, its availability from other sources, and the effect of disclosure on frank and independent discussion of contemplated government policies. McClain, supra, 99 N.J. at 361-62.
N.J.S.A. 17:30C-1 to -31 is based on the ULA. Pursuant to that Act, the Legislature has given the Commissioner the exclusive role as receiver of an insurer. That role includes the institution of liquidation or rehabilitation proceedings with court supervision. N.J.S.A. 17:30C-15. Upon appointment of the Commissioner as rehabilitator or liquidator, the Commissioner must take possession and control of the insurer's property and business and, in doing so, may deal with the insurer's property and business in her own name. N.J.S.A. 17:30C-7, -9. All claims against the insolvent insurer are to be filed with the Commissioner. N.J.S.A. 17:30C-20. Unlike the day-to-day functions of the Department of Insurance that are carried out by regular public employees, the Commissioner, as liquidator, is permitted to hire specially “such counsel, clerks, and assistants as he deems necessary” to aid in carrying out the demands of the position of liquidator. N.J.S.A. 17:30C-17.
Several of the states that adopted the ULA have recognized that a state insurance commissioner is not acting as a government regulator when serving in the capacity of liquidator. For example, in Crawford v. Employers Reins. Co., 896 F.Supp. 1101, 1102 (W.D. Okla. 1995), after reinsurers removed the insurance commissioner's suit against them to federal district court, the court rejected the commissioner's argument that the case should be remanded back to state court because the commissioner was the “alter ego” of the state for purposes of determining federal jurisdiction. The court noted that the commissioner initiated action to enforce a contract against the defendant reinsurers in his capacity as a receiver for the insolvent company, and not as a state official asserting state interests. Ibid. Similarly, in In re Liquidation of Ideal Mut. Ins. Co., 532 N.Y.S.2d 371, 374 (N.Y. App. Div. 1988), the court noted that “[w]hen acting as statutory liquidator of an insolvent insurer, the Superintendent [of Insurance] is essentially a court-appointed private trustee who for all practical purposes takes the place of the insolvent insurer and stands in its shoes.” Therefore, the court held that “[t]he Superintendent as Liquidator of an insurance company, does therefore, occupy a legal personality separate and distinct from the Superintendent of Insurance as a public official charged with regulating the insurance industry generally.” Ibid.
However, some out-of-state cases also hold to the contrary. In El Paso Elec. Co. v. Texas Dep't of Ins., 937 S.W.2d 432, 436 (Tex. 1996), the court stated that it “disagree[s] that the receiver for an insolvent insurer serves merely as a 'private trustee.' To the contrary, the receiver principally performs a public, regulatory function.” Ibid. The court concluded that
[t]he purpose of establishing a system of liquidation through the state is to prevent the waste of assets which had previously been occasioned through receiverships. The commissioner as liquidator of an insolvent insurance company is a state officer performing duties enjoined upon him by the state and in their performance he acts in behalf of the state.
In our view, neither of those positions is completely correct. Certainly, the Commissioner as liquidator is functioning, at least in part, in a private role. Indeed, prior to the ULA, the role of liquidator was filled by a private citizen. Moreover, the Commissioner's fiduciary responsibility is to the creditors of the insolvent insurer, not to the public at large. At the same time, it is clear that “the insurance business affects the public interest and is therefore subject to reasonable regulation, including liquidation proceedings of an insolvent carrier.” In re Liquidation Ins. Co., 240 N.J.Super. 480, 490 (App. Div. 1990) (emphasis added). In other words, the Commissioner functions in a hybrid status, part public and part private, when he or she oversees the liquidation of an insolvent insurer.
Because of that hybrid role and because of the general disfavor with which we view impediments to the truth seeking process, Dixon v. Rutgers, the State Univ. of New Jersey, 110 N.J. 432, 447 (1988), we do not believe the invocation of the deliberative process privilege should be countenanced in this context. Indeed, in McClain we stated: “If the reasons for maintaining confidentiality do not apply at all in a given situation, or apply only to an insignificant degree, the party seeking disclosure should not be required to demonstrate a compelling need.” McClain, supra, 99 N.J. at 362. That is the case here. As we have held, when new privileges are recognized, it is only in a setting in which a purely private interest in disclosure is outweighed by a strong, purely public interest in confidentiality. Payton, supra, 148 N.J. at 541. A purely public interest does not exist when the Commissioner functions as the liquidator of an insolvent insurer.
That is not to suggest that this is just like an ordinary discovery issue between private citizens in which all relevant evidence is presumed to be discoverable. Just as the Commissioner's hybrid status eliminates the presumption against discovery embedded in the privilege, it also negates the presumption in favor of discovery that would exist in a case in which no public interest in confidentiality is implicated. Simply because we have declared the privilege to be inapplicable “should not be read to imply that we regard the [Commissioner's] confidentiality interest as insignificant.” Dixon, supra, 110 N.J. at 454. The rejection of the privilege in this context and the protection of the integrity of the Commissioner's agency decisions are not inconsistent. “Trial courts may guarantee to [reinsurers] the discovery of materials needed to support [their case], while at the same time ensuring that the manner and scope of discovery minimizes intrusion into the confidentiality” of the deliberative processes involved in forming a liquidation plan. Ibid. Indeed, we are certain that the Commissioner's confidentiality interests will be “amply accommodated by the exquisite weighing process that our courts regularly undertake when determining whether to order disclosure of sensitive documents in a variety of contexts.” Payton, supra, 148 N.J. at 545 (internal quotations and citations omitted).
In sum, the only sui generis aspect of a hybrid case like this one, in terms of the discovery of deliberative process materials, is that no presumption is deemed to flow in either direction. Neither discovery nor confidentiality will be presumed. The State must establish the deliberative nature of the documents and, thereafter, each side will advance its claims (the State for confidentiality and the reinsurers for discovery). The trial court must then engage, after an in camera review of the documents, in the balancing process that is often required to determine whether, and under what circumstances, disclosure of sensitive documents should be ordered. In striking the balance the court is free to adopt any of the whole range of available discovery limiting tools, including protective orders, sealing, and redaction to name a few. Payton, supra, 148 N.J. at 542. In our view, a flexible common sense application of our rules of discovery is the best and fairest means of accommodating Munich's interest in opposing the FDP and the Commissioner's interest in the integrity of agency decisions.
[n]o person shall disclose official information of this State or of the United States (a) if the disclosure is forbidden by or pursuant to any Act of Congress or of this State, or (b) if the judge finds that disclosure of the information in the action will be harmful to the interests of the public.
The term “official information” is not defined. However, a prior version of N.J.R.E. 515 defined the term to include “information not open or theretofore officially disclosed to the public relating to internal affairs of the State . . . in the course of duty, or transmitted from one such official to another in the course of his duty.” Biunno, N.J. Rules of Evidence, comment 1 on N.J.R.E. 515 (1999). “Dean Wigmore has noted that some official information privilege undoubtedly exists, but adds that the scope of that privilege has not yet been defined with certainty.” Ibid. (citing 8 Wigmore on Evidence § 2387 at 792 (McNaughton rev. 1961)). For instance, information such as the precise location of the site where a wiretap interception was made is the type of information that is entitled to protection. State v. Travis, 133 N.J. Super. 326, 332 (App. Div. 1975). Also encompassed within the concept is the exact location of a vantage point from which surveillance of criminal activity was made by law enforcement officers. State v. Garcia, 131 N.J. 67, 73-74 (1993); State v. Zenquis, 131 N.J. 84, 88 (1993). The basic difference between N.J.R.E. 515 and the deliberative process privilege is that the former protects facts from disclosure whereas the latter protects opinions.
Although the Commissioner has not invoked N.J.R.E. 515, in the event that she does so her hybrid status as liquidator will inform the inquiry. Because the Commissioner as liquidator is not acting completely as a government official, the information pertaining to the FDP and liquidation proceedings is not technically “official information” of the State. Hence, the Commissioner may not claim the insulation of liquidation related facts by simply invoking N.J.R.E. 515. As in the case of the deliberative process privilege, if the Commissioner seeks the protection of N.J.R.E. 515 the reinsurers may counter with the need for disclosure and the trial court will simply balance those interests.
CHIEF JUSTICE PORITZ and JUSTICES O'HERN, STEIN, COLEMAN and VERNIERO join in JUSTICE LONG's opinion. JUSTICE LaVECCHIA did not participate.
NO. A-72/102 SEPTEMBER TERM 1999
ON APPEAL FROM Appellate Division, Superior Court
ON CERTIFICATION TO
IN THE MATTER OF THE
LIQUIDATION OF INTEGRITY
INSURANCE COMPANY
DECIDED July 26, 2000
Chief Justice Poritz PRESIDING
OPINION BY Justice Long
CONCURRING OPINION BY
DISSENTING OPINION BY
Footnote: 1 1Incurred but not reported. Footnote: 2 2 Some cases articulate that need as a particularized one. Farley, supra, 11 F. 3d at 1389; Ferrell v. United States Dep't of Housing and Urban Dev., 177 F.R.D. 425, 429 (N.D. Ill. 1998). Footnote: 3 3 Freedom of Information Act, 5 U.S.C.A. §552.