                             In the

United States Court of Appeals
              For the Seventh Circuit

No. 10-1963

A MERICAN B ANK,
                                             Plaintiff-Appellant,

                               v.

C ITY OF M ENASHA, et al.,
                                          Defendants-Appellees.
                        ____________
             Appeal from the United States District Court
      for the Northern District of Indiana, Hammond Division.
     No. 4:09-cv-0064-TLS-APR—Theresa L. Springmann, Judge.
                        ____________

   A RGUED O CTOBER 26, 2010—D ECIDED N OVEMBER 29, 2010
                        ____________



  Before P OSNER, FLAUM, and SYKES, Circuit Judges.
  P OSNER, Circuit Judge. The Private Securities Litigation
Reform Act of 1995 provides, with an immaterial excep-
tion, that “all discovery and other proceedings shall be
stayed during the pendency of any motion to dismiss” a
suit governed by the Act. 15 U.S.C. § 78u-4(b)(3)(B).
The Securities Litigation Uniform Standards Act of
1998 (SLUSA) amended the Private Securities Litigation
2                                               No. 10-1963

Reform Act (PSLRA) to authorize the district court to
“stay discovery proceedings in any private action in a State
court, as necessary in aid of its jurisdiction, or to protect
or effectuate its judgments, in an action subject to a
stay of discovery pursuant to [section 78u-4(b)(3)(B),
quoted above].” 15 U.S.C. § 78u-4(b)(3)(D). The question
presented by this appeal is whether this provision of
SLUSA authorizes the district court to enjoin a private
securities plaintiff from gaining access to records that a
state’s public-records law entitles members of the public to
see and copy at their own expense.
  The City of Menasha, Wisconsin issued bond anticipation
notes (in effect, short-term bonds) to finance the conversion
of an electric power plant owned by it to a steam-generat-
ing plant that would burn a cheaper form of coal, emit
less pollution, and provide steam to nearby paper mills.
But the project went way over budget—costing $40
million rather than the planned $12.7 million—and eventu-
ally the City defaulted on the bonds to the tune of more
than $20 million. Menasha Utilities, “Executive Sum-
mary—Business Plan for Menasha Power Plant Conver-
sion,”       June      22, 2006, www.menasha-
utilities.com/media/MU_-_Business_Issue_6-22-06.pdf
(visited Nov. 1, 2010); Rick Romell, “City of Menasha Sued
After Defaulting on Bonds,” Journal Sentinel Online,
Sept. 28, 2009, www.jsonline.com/business/62342647.html
(visited Nov. 1, 2010). Owners of the bonds, including
a Wisconsin bank named American Bank, filed a class-
action suit against the City, charging that it had violated
federal securities law by failing to disclose to prospective
buyers of the bonds material information about the conver-
No. 10-1963                                              3

sion project. The suit named “Menasha Utilities” and
“Menasha Steam Utility” as additional defendants, but
they seem merely to be names of subdivisions of the city’s
government rather than entities distinct from the City, so
we can ignore them.
   American Bank was a named plaintiff in the class action
suit, and less than two weeks after the suit was filed it
submitted a request to the City, pursuant to Wisconsin’s
Public Records Law, Wis. Stat. §§ 19.31-.39, to inspect a
large number of records, specified in the request, relating
to the conversion project. (In an example of silly, and
indeed unprofessional, advocacy, Menasha’s brief neither
cites nor mentions the public-records law, as if there
were no legal basis for American Bank’s insisting
on compliance with the request and as if therefore the
stay granted by the district court did not preempt a
state law.) Although required to respond to the
request “without delay,” § 19.35(4)(a), the City dragged
its heels, so American Bank obtained from a Wisconsin
state court a mandamus commanding the City to comply
with the request. The records sought were—the City
does not deny—public records within the meaning of
the public records law, Wis. Stat. § 19.32(2), and there-
fore available to any “requester,” including one whose
interest in the records stems from his involvement
in litigation. Cavey v. Walrath, 598 N.W.2d 240, 243
n. 4 (Wis. App. 1999); State ex rel. Lank v. Rzentkowski,
416 N.W.2d 635, 637-38 (Wis. App. 1987).
  The City responded to American Bank’s request and to
the mandamus order not by producing the documents, as
4                                                No. 10-1963

state law required and the state court had ordered, but
instead by asking the district court in which the securities
suit was pending for a stay under subsection 4(b)(3)(D)
of SLUSA. The court granted the stay and American Bank
has appealed.
   The City argues that the stay is not appealable because it
is just a discovery order. For reasons explained in Reise v.
Board of Regents of University of Wisconsin System, 957 F.2d
293, 295 (7th Cir. 1992), discovery orders, being interlocu-
tory, generally are not appealable in the federal court
system, Allendale Mutual Auto Ins. Co. v. Bull Data Systems,
Inc., 32 F.3d 1175, 1177 (7th Cir. 1994); Goodman v. Harris
County, 443 F.3d 464, 468 (5th Cir. 2006); International
Products Corp. v. Koons, 325 F.2d 403, 406 (2d Cir. 1963)
(Friendly, J.), even though they look like injunc-
tions—which are appealable though interlocutory, 28
U.S.C. § 1292(a)(1)—because they are orders to do rather
than to pay. There are exceptions to the rule barring the
immediate appeal of a discovery order, as when the
order “resolves an important issue completely separate
from the merits of the action” and is therefore appealable
under the collateral-order doctrine, Goodman v. Harris
County, supra, 443 F.3d at 468, or when a petitioner for
mandamus proves “irreparable harm . . . and a clear
right to the relief sought [the vacating of the discovery
order].” In re Sandahl, 980 F.2d 1118, 1119 (7th Cir.
1992); see also United States ex rel. Chandler v. Cook County,
277 F.3d 969, 981 (7th Cir. 2002). In discussing the scope
of the collateral-order doctrine, the Supreme Court said
recently that the critical question is “whether deferring
review until final judgment so imperils the interest as
No. 10-1963                                                   5

to justify the cost of allowing immediate appeal of the
entire class of relevant orders.” Mohawk Industries, Inc.
v. Carpenter, 130 S. Ct. 599, 606 (2009). Wisconsin considers
the availability of public records to be sufficiently impor-
tant to justify the grant of mandamus to compel immediate
production of requested documents—a right infringed by
the stay granted to Menasha.
   Maybe a further exception to the final-judgment rule
should be carved for a discovery order that has the effect
of preempting a state law, because such an order is a slap
in federalism’s face. Johnson v. Fankell, 520 U.S. 911,
922 (1997); City of Joliet v. New West, L.P., 562 F.3d 830, 836-
37 (7th Cir. 2008). The argument for the exception gains
support from the echo in SLUSA’s stay provision
of language in both the All Writs Act, 28 U.S.C. § 1651,
and the Anti-Injunction Act, 28 U.S.C. § 2283 (“as necessary
in aid of its jurisdiction, or to protect or effectuate
its judgments”), since the “writs” issued under those acts
are appealable as injunctions. Winkler v. Eli Lilly & Co.,
101 F.3d 1196, 1200-01 (7th Cir. 1996); Negrete v. Allianz
Life Ins. Co., 523 F.3d 1091, 1096-97 (9th Cir. 2008); Burr
& Forman v. Blair, 470 F.3d 1019, 1027-28 (11th Cir. 2006);
In re BankAmerica Corp. Securities Litigation, 263 F.3d
795, 800 (8th Cir. 2001); Georgine v. AmChem Products, Inc.,
83 F.3d 610, 623-24 (3d Cir. 1996). The bank argues
that inspecting public records pursuant to a state statute
is not discovery within the meaning of the stay provision,
and thus a stay of such inspection is an injunction against
enforcement of a state law and appealable as such—as
in United States v. Board of Education, 11 F.3d 668, 671-
72 (7th Cir. 1993); Olde Discount Corp. v. Tupman, 1 F.3d 202,
6                                                 No. 10-1963

206 (3d Cir. 1993), and countless other cases—without need
for a further exception to the final-judgment rule.
  So this may be a case in which the merits of the appeal
and whether we have jurisdiction over it are inseparable.
See, e.g., Kerns v. United States, 585 F.3d 187, 195 (4th Cir.
2009); Shoaf v. Department of Agriculture, 260 F.3d 1336,
1340-41 (Fed. Cir. 2001); Nowak v. Ironworkers Local 6 Pension
Fund, 81 F.3d 1182, 1190 (2d Cir. 1996). If the City’s inter-
pretation of federal law is correct, American Bank is
engaged in discovery and so cannot appeal unless it can
invoke one of the exceptions to the rule against interlocu-
tory appeal of discovery orders. If American Bank’s
interpretation is right, it is certain that the stay is not the
stay of a discovery order and so can only be an injunction,
and only a stay of discovery is authorized by SLUSA. We
think American Bank is right, and that resolves both
jurisdiction and merits.
  The word “discovery” is not a synonym for investigation.
Much of the information-gathering that litigants do is
not “discovery” as the term is understood in the law.
See, e.g., Fed. R. Civ. P. 26(b); Fed. R. Civ. P. 34. They
talk to their clients and to witnesses, read newspaper
accounts, study the records of previous judicial or adminis-
trative proceedings, troll the Web—they do all these
things and more without being thought to be conducting
“discovery.” A plaintiff’s lawyer might study corporate
records of the defendant that were freely accessible online
and no one would think the lawyer was engaged in
“discovery.” Corporate documents required by the SEC to
be filed are available online, see www.sec.gov/edgar.shtml
No. 10-1963                                                  7

(visited Nov. 8, 2010), and those documents are often at the
heart of the precomplaint investigation required by the
Private Securities Law Reform Act.
   The case law uniformly refuses to define requests for
access to federal or state public records under public-
records laws (such as the federal Freedom of Information
Act and state public records laws—including Wisconsin’s)
as discovery demands, even when as in this case the
request is made for the purpose of obtaining information
to aid in a litigation and is worded much like a
discovery demand. NLRB v. Robbins Tire & Rubber Co.,
437 U.S. 214, 242 and n. 23 (1978); NLRB v. Sears, Roebuck
& Co., 421 U.S. 132, 143 n. 10 (1975); Leucadia, Inc. v.
Applied Extrusion Technologies, Inc., 998 F.2d 157, 167-68
(3d Cir. 1993); Maycock v. Nelson, 938 F.2d 1006, 1008
(9th Cir. 1991); RSR Corp. v. Brock, 764 F.2d 355, 367-68
(5th Cir. 1985); Cavey v. Walrath, supra, 598 N.W.2d at 243 n.
4; State ex rel. Lank v. Rzentkowski, supra, 416 N.W.2d at 637-
38; Kentner v. Indiana Public Employers’ Plan, Inc., 852 N.E.2d
565, 574-75 (Ind. App. 2006). The Delaware General
Corporation Law, for example, entitles shareholders to
inspect corporate books and records for “any proper
purpose.” Del. Code Ann. tit. 8, § 220(b), and the Delaware
Supreme Court has ruled that requests made under
this provision are not discovery demands. E.g., Saito
v. McKesson HBOC, Inc., 806 A.2d 113, 114-15 (Del. 2002).
That is all that American Bank did here when it
requested access to public (not private, not confidential,
not privileged, not hidden) records of its opponent.
 Of course Congress in SLUSA might have been using the
word “discovery” in some broad lay sense rather than in
8                                                 No. 10-1963

the conventional legal sense, and then we would be obliged
to give the word its lay meaning, which might encompass
American Bank’s request. “Loose construction” is not an
oxymoron; it is a time-honored interpretive approach. See,
e.g., Oliver Wendell Holmes, “John Marshall” (1901), in The
Essential Holmes 206, 207 (Richard A. Posner ed. 1992). But
we would have to be given a reason, grounded in statutory
purpose or practical consequences, for an interpretation
that goes against the semantic grain, and the City is unable
to give us any; its arguments are purely semantic—in
a case in which semantics (the conventional legal
meaning of “discovery”) favors the other side.
  The purpose of authorizing stays of state-court
discovery relating to federal securities litigation is
similar to that of the enhanced pleading requirements of
the Private Securities Litigation Reform Act at issue
in the Tellabs litigation, see Tellabs, Inc. v. Makor Issues &
Rights, Ltd., 551 U.S. 308, 320-21 (2007), and on remand,
513 F.3d 702, 705-06 (7th Cir. 2008); see also Blue
Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 740-42
(1975); Schleicher v. Wendt, 618 F.3d 679, 686 (7th Cir. 2010);
Cozzarelli v. Inspire Pharmaceuticals Inc., 549 F.3d 618, 623-
24 (4th Cir. 2008), and of the Supreme Court’s recent Iqbal
and Twombly decisions, Ashcroft v. Iqbal, 129 S. Ct. 1937,
1949-50, 1953 (2009); Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 557-59 (2007); see also Cooney v. Rossiter, 583
F.3d 967, 971 (7th Cir. 2009); Francis v. Giacomelli, 588 F.3d
186, 193 (4th Cir. 2009). It is to prevent settlement
extortion—using discovery to impose asymmetric costs
on defendants in order to force a settlement advantageous
to the plaintiff regardless of the merits of his suit.
No. 10-1963                                                 9

Thorogood v. Sears, Roebuck & Co., No. 10-2407, 2010 WL
4283637 at *6-8 (7th Cir. Nov. 2, 2010). That purpose could
be thwarted if the plaintiff in a federal securities suit,
by filing a parallel suit in state court under state
securities law against the same defendant that he had sued
in federal court, could use state discovery procedure to
impose the very burdens on the defendant that the PSLRA,
before the amendment made by SLUSA authorizing
stays of discovery under state law, sought to lift by the
automatic stay; the amendment closed a loophole. Merrill
Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 81-
82 (2006); Gavin v. AT&T Corp., 464 F.3d 634, 640 (7th
Cir. 2006); Instituto De Provision Militar v. Merrill Lynch,
546 F.3d 1340, 1344-45 (11th Cir. 2008).
  But the concern with settlement extortion that
underlies the original and amended provisions does not
justify the interpretation urged by Menasha. For as
is typical of public-records statutes, the costs associated
with responding to requests for access to public records
under Wisconsin’s public-records law are charged to the
person making the request. Wis. Stat. § 19.35(3);
City of Menasha, Public Records Notice and Policy
3,www.cityofm enasha-wi.gov/content/departm ents/-
city_clerk/documents/PUBLIC%20RECORDS%20NOTIC
E.pdf (visited Nov. 1, 2010). Although the statute and
city regulation don’t specify that the charge for production
of public records includes the time of the staff in respond-
ing to a request (labor costs), the statute allows the public-
records offices to charge fees reflecting the “actual, neces-
sary and direct cost of reproduction and transcription
of the record,” Wis. Stat. § 19.35(3)(a), and both a recent
10                                                No. 10-1963

case, WIREdata, Inc. v. Village of Sussex, 751 N.W.2d 736,
762 (Wis. 2008), and an older opinion of the Attorney
General of Wisconsin, 72 Opinions of the Attorney General of
the State of Wisconsin 150-51 (Sept. 16, 1983), make clear
that the fees can include labor expenses. In any event
there is no expense to the defendant, as he doesn’t have
to rummage through his files to respond to a demand
for information—at least qua defendant; it is happenstance
that in this case the custodian of the records and
the defendant are one and the same—the City of Menasha.
The City shouldn’t be allowed to use its dual status to
gain an advantage over other defendants in private
securities litigation. And while it’s true that if American
Bank uses any of the information it gleans from the
records to oppose the motion that the City has filed to
dismiss the class action suit the City’s lawyers will have
to analyze the information, so will American Bank’s
lawyers; the analysis costs are symmetrical.
  The City acknowledges that it couldn’t refuse a newspa-
per’s request for the records, and the newspaper would
be free to publish them. Yet it claims a right to an even
broader stay than the district court granted it—to a stay
that would forbid American Bank to suggest to
a newspaper that it request and publish the records, or
even hint at such a suggestion by telling a reporter that
there might be some interesting stuff in the public-records
office about the City’s misbegotten power-plant
conversion project. And so another objection to the City’s
position in this case is that it would invite satellite litiga-
tion over efforts to circumvent a stay and even
raise questions under the First Amendment.
No. 10-1963                                               11

   It would also create a precedent of unmanageable
scope. Suppose a newspaper reporter had requested and
obtained records of the City’s conversion fiasco but had
not published anything. Could American Bank’s
lawyers ask him about what he had found in his search?
Or would that be “discovery” too? What if the
lawyers search Google under “City of Menasha securi-
ties litigation.” Is that “discovery”—for if they do that,
they will find articles that contain information about
the litigation that they might find useful. See,
e.g., “Menasha Educates Residents on Vote over WPPI’s
Energy Purchase of Menasha Utilities Assets,” Mar. 21,
2010, www.postcrescent.com/article/20100321/APC0101/-
3210497/Menasha-educates-residents-on-vote-over-WPPI-
Energy-purchase-of-Menasha-Utilities-assets (visited Oct.
27, 2010). In rejecting an attempt to “exempt private
and citizen litigants from the right to disclosure of public
records if the materials sought potentially relate to a
matter under litigation between the parties,” State ex rel.
Lank v. Rzentkowski, supra, 416 N.W.2d at 637-38, explained
that “circumvention of the statute under such an interpre-
tation could be accomplished with ease and impunity.
Nothing in [the] argument would preclude a person, not
a party to the underlying litigation, from rightfully de-
manding the materials and then turning them over to the
litigants who otherwise would be denied them. The
interpretation . . . would encourage surreptitious circum-
venting of the statute. We are hesitant to adopt an interpre-
tation which reduces a law to such unenforceable stature
and holds it out to ridicule rather than respect.”
12                                            No. 10-1963

   The City’s position is not only wrong; if one looks to
the future it is futile. The City acknowledges that had
American Bank requested the records before filing
suit, there would have been no ground for refusing the
request. So the only effect (beyond this case) of our af-
firming the district court would be that in the future
private securities plaintiffs would file their public-
records requests a few weeks or months before rather
than (as in this case) a few weeks after filing suit.
  Of course if states create discovery procedures but call
them “requests for public records,” perhaps by deeming all
records in the files of private corporations public, this
would not defeat a motion for a stay. Substance trumps
form. But in this case substance and form coincide.
 The judgment granting a stay is
                                               R EVERSED.




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