Castillo v. Frank
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FACTS AND PROCEDURAL HISTORY

Castillo was employed by the United States Postal Service as a letter carrier at the Downtown Station in Corpus Christi, Texas until her discharge on July 25, 1988. On June 9, 1988, she told her immediate supervisor, Romera "Homer" Zuniga ("Zuniga") that she had been attacked by an unknown black man at a location on her delivery route. Zuniga reported the incident to the police and postal inspectors, and then accompanied Castillo to a doctor who examined and released her. Castillo was bruised on her right arm, but did not suffer any major or debilitating physical injuries.

While still at the doctor's office, Zuniga filled out portions of, and had Castillo complete and sign, a Federal Employee's Notice of Traumatic Injury and Claim for Continuation of Pay/Compensation and a Duty Status Report, certifying that Castillo had suffered an on-the-job injury and requested a continuation of pay and compensation for wage loss, if any. 1 Castillo was also interviewed by postal inspectors within one hour of the alleged attack.

The Postal Inspection Service began an investigation, but was unable to uncover a suspect or any witness to the incident, so the investigation was effectively closed. Approximately a week later, the postal inspectors received an anonymous telephone call from an individual who, after being assured that this individual's identity would remain confidential, volunteered information that the alleged assault had not occurred in the manner or place indicated by Castillo, but rather that her injuries were the result of a domestic disturbance at the home of one of her customers.

Based on the information provided by the confidential informant, the postal inspectors reopened the investigation. The postal inspectors again met with Castillo and offered her an opportunity to amend her account of the incident, which she declined to do. The postal inspectors then proceeded to attempt to verify the information they received from the informant. They visited the home of Elroy Chandler ("Chandler"), whose name and address they obtained from the informant. Chandler told the postal inspectors that he had grabbed Castillo by the right arm, and he showed the inspectors how he did it.

The results of the postal inspector's second investigation were reported in an Investigative Memorandum to the Postmaster in Corpus Christi. Based on the information contained in the Investigative Memorandum, Zuniga took steps to have Castillo removed. Castillo was issued a notice of removal on June 22, 1988, based on her fraudulent injury claim and improper conduct in violation of the U.S. Postal Service's Standards of Conduct.

Castillo unsuccessfully appealed her removal through the grievance-arbitration procedure contained in the applicable collective bargaining agreement. The Arbitrator denied Castillo's grievance, finding that the Postal Service had met its burden of establishing good cause for the notice of removal or rather, that Castillo acted dishonestly in wilfully filing a fraudulent injury claim.

Castillo also filed an informal complaint of discrimination with the Postal Service, and later filed a formal complaint on August 26, 1988. Both the informal and formal complaints were investigated, but settlement attempts proved unsuccessful. On January 10, 1989 a Notice of Proposed Disposition was issued by the Postal Service proposing a finding of no discrimination. In response to the notice, Castillo requested a hearing before an Administrative Law Judge ("ALJ"). At the conclusion of the evidentiary hearing, the ALJ issued a Recommended Decision recommending a finding of no discrimination on the basis of age and national origin, but an affirmative finding of discrimination on the basis of sex. The ALJ further recommended reinstatement, appropriate back pay and benefits and attorneys' fees and costs. However, on October 3, 1989 the Postal Service issued a final decision finding no discrimination on the basis of age, national origin, or sex.

On October 31, 1989, Castillo filed a complaint in federal court against the Postmaster alleging that her termination was based on unlawful sex, national origin and age discrimination in violation of Title VII. 2 On June 7, 1991, Castillo filed a motion to compel the identity of the confidential informant. A magistrate judge heard argument and issued an order on July 2, 1991 granting Castillo's motion to compel. On July 5, 1991, the district court issued an order referring the case to the magistrate judge as special master pursuant to FED.R.CIV.P. 53 and 42 U.S.C. Sec. 2000e-5(f)(5).

On July 12, 1991, the Postmaster filed objections to the magistrate judge's July 1, 1991 disclosure order on the basis that the requested information concerning the confidential informant was privileged. After hearing argument from the parties, the magistrate judge entered an order on August 26, 1991 overruling the Postmaster's objections and again ordered disclosure of the confidential informant's identity. On September 5, 1991, the Postmaster renewed his objections to the magistrate judge's disclosure order of August 26, 1991.

The district court issued an order on August 25, 1991 denying the Postmaster's objections without prejudice with leave to file authority establishing the court's authority to review a ruling by a magistrate judge acting as a special master on a non-dispositive motion. After the Postmaster filed his authority, a hearing was held, at which time the district court requested an in camera review of the information concerning the confidential informant. After receiving the sealed information, the court issued an order on June 3, 1993 denying the motion to compel on the basis that the identity of the confidential informant is privileged and exempt from discovery under Rule 26(b)(1), and setting aside the magistrate judge's July 2, 1991 disclosure order. 3