Confidential Informants in Private Litigation: Balancing Interests in Anonymity and Disclosure

Heightened pleading standards and limits on discovery in private securities fraud actions make confidential informants crucial in many cases. While courts have widely recognized the importance of confidential informants and the need to protect them from retaliation, they have not applied consistent standards for how informants must be identified in pleadings, and have failed to take into account substantial bodies of relevant caselaw when deciding whether to require that informants’ names be disclosed in discovery. This article offers a framework for when and how confidential informants should be identified, taking into account the competing interests in anonymity and disclosure. It offers a refined standard for identifying informants at the pleading stage that focuses on how the employee came to have the information pleaded, rather than on the employee’s job title or duties. It also proposes use of in camera review of witness statements. At the discovery stage, this article criticizes the use of the attorney work product doctrine as a basis for protecting informant identities. It argues that courts should perform a balancing analysis that directly weighs public policy and privacy interests in favor of informant anonymity against defendants’ legitimate needs for disclosure. This approach is supported by numerous cases protecting the identities of informants and other types of witnesses under Fed. R. Civ. P. 26(c), and also finds support in the many cases construing the formal privilege applicable to government informants. Finally, this article encourages plaintiffs to seek protective orders for informants early in litigation and briefly discusses protection for witness interview notes