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FTC v. ANDERSON

December 13, 1977

FEDERAL TRADE COMMISSION, Petitioner,
v.
ROBERT O. ANDERSON, et al., Respondents



The opinion of the court was delivered by: FLANNERY

 This matter comes before the court on the Federal Trade Commission's petition for an order requiring respondents to appear, to testify, and to produce documents in a proceeding being conducted by the Federal Trade Commission (FTC). The petition to enforce the subpoenas duces tecum arose out of an administrative adjudicatory proceeding entitled Exxon Corp., et al. Docket No. 8934. The administrative complaint issued on July 18, 1973 alleges violations of § 5 of the FTC Act, 15 U.S.C. § 45 (1970 & Supp. V 1975). In sum, the complaint charges respondents with having maintained and reinforced a noncompetitive market structure and having exercised monopoly power in the refining of crude oil into petroleum products in the Eastern and Gulf Coast States, along with parts of the Mid-Continent area of the United States.

 The administrative law judge (ALJ) granted in part, but denied a major portion of, complaint counsel's motion for the issuance of the subpoenas on November 11, 1976. In response to respondents' motions, the ALJ issued a protective order on January 5, 1977 and certified certain issues for appeal to the Commission pursuant to 16 C.F.R. § 3.42(c)(9). After appeals to the Commission where part of the protective order was adopted with certain provisos *fn1" and the rest of the appeals were rejected, the respondents indicated that they would not produce allegedly confidential documents. Texaco, Inc. indicated that it would not even produce nonconfidential documents. The ALJ certified the subpoenas to the Commission for judicial enforcement and the Commission directed the institution of this action, which was filed on July 26, 1977.

 The joint respondents *fn2" in this action, other than Texaco, attempted to secure a declaratory judgment with respect to the alleged inadequacy of the protective order issued at the administrative level in the United States District Court for the District of Delaware. The Delaware court dismissed the action without prejudice and declined to invoke its discretionary jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201 (1970). The court was of the opinion that the present proceedings before this court provided the proper forum for review of the protective order questions. Exxon Corp. v. FTC, 436 F. Supp. 1019, slip op. at 14-15 (D.Del. 1977).

 In this proceeding the joint respondents, excluding Texaco, Inc., again challenge the adequacy of the protective order and request that this court impose its own protective order. Texaco resists enforcement in toto by challenging the Commission's authority and the nature of the administrative proceeding. All of the respondents have made motions to dismiss the individual corporate presidents who also were named as respondents in this action.

 I. Enforcement of a FTC Subpoena

 The FTC has the authority to issue subpoenas and this court has the jurisdiction to enforce them under § 9 of the FTC Act, 15 U.S.C. § 49 (1970 & Supp. V 1974) This court's role in the enforcement of an administrative subpoena is strictly limited. Although the scope of the issues that can be litigated in an enforcement proceeding is narrow, the court's function is "neither minor nor ministerial" Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 217 n.57, 90 L. Ed. 614, 66 S. Ct. 494 (1946). The court, however, need only ascertain whether "the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant." United States v. Morton Salt Co., 338 U.S. 632, 652, 94 L. Ed. 401, 70 S. Ct. 357 (1970); see Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 87 L. Ed. 424, 63 S. Ct. 339 (1975); FTC v. Texaco, 180 U.S. App. D.C. 390, 555 F.2d 862, 871-72, 873-74 n.23, 879 (1977) (en banc). In addition, a respondent may challenge an agency's exercise of its subpoena power on the ground that it is unduly burdensome. Oklahoma Press Publishing Co., supra, 327 U.S. at 208.

 The FTC asserts that the subpoenas are within the Commission's authority, seek relevant information, and are not unduly burdensome. The assertions have not been challenged by the respondents, except Texaco. Although Texaco's contentions will be dealt with separately later, it should be noted here that the FTC has shown to this court's satisfaction that subpoenas are within its authority, seek relevant information and not unduly burdensome. See FTC's Memorandum in Support of Petition for Enforcement at 14-16; ALJ's Order of November 11, 1976 at 54-60.

 II. The Protective Order

 The joint respondents assert that the protective order entered by the ALJ, as modified by the Commission, does not provide adequate protection against disclosure of the documents submitted by them to the FTC in response to the subpoenas. The joint respondents have submitted a proposed protective order providing the relief that they believe necessary for their protection. Even if the court should deny joint respondents any of the relief they seek, they still would have the court enter a protective order that merely would echo the terms of the ALJ's order. The joint respondents contend that such an order, embodying the terms of the ALJ's order, is necessary to provide them adequate protection because the Commission technically is not bound by the ALJ's entire order. The joint respondents also have alleged that the FTC historically has made illegal and improper disclosures.

 The Commission has stated that it is clearly bound by paragraph 9 of the protective order dealing with notice requirements for disclosure of confidential documents because that paragraph was adopted by the Commission with modifications. Hearing Transcript at 7 (November 9, 1977); see Commission's Order of January 31, 1977. As to the rest of the order, the Commission's position, as expressed to the court at the hearing on this matter, is that it is bound by the protective order as a practical matter. Hearing Transcript at 7-11 (November 9, 1977). The Commission's concern is the possibility of a situation arising where it would have to violate the protective order in order to comply with a statutory duty, for example, under the Freedom of Information Act. The Commission contends that if those circumstances were to arise, it would have to comply with the statute and violate the order. The likelihood of such a conflict arising appears unlikely. In any event, the Commission indicated that in similar situations which have arisen in the past, it has given the respondents and the ALJ notice of their plans to violate the protective order in order that these parties could react to the FTC's proposed course of action. Hearing Transcript at 8-11 (November 9, 1977).

 The court has no reason to question the veracity of the Commission's assertions which are presumably made in good faith. Furthermore, the court does not believe that the ALJ's protective order must be turned into a court order to provide adequate protection. In affirming an ALJ's protective order, courts have not found it necessary to issue their own duplicate protective order. FTC v. Lonning, 176 U.S. App. D.C. 200, 539 F.2d 202, 210-11 (1976); FTC v. Dresser Industries, Inc., CCH 1977-1 Trade Cases 61400, at 71493 (D.D.C. April 26, 1977); cf. FTC v. United States Pipe and Foundry Co., 304 F. Supp. 1254, 1260 (D.D.C. 1969).

 Turning to the provisions of the protective order, there are three significant differences between the ALJ's order, as modified, and the relief sought by the joint respondents. First, the FTC's order does not apply to nonconfidential documents. The joint respondents seek to restrict disclosure of such documents and to limit the use of these documents to use in the preparation and trial of the Exxon proceeding. Second, the Commission's protective order provides that if a confidential document is to be released in response to an FOIA request, the Commission will give the party who supplied the document 10 days notice prior to its release. The joint respondents make no provision for any such release, even for nonexempt, nonconfidential documents, but they do raise issues concerning the application of the Freedom of Information Act. Finally, the Commission's protective order provides that in response to judicial compulsory process or a subpoena or official request from a congressional committee or subcommittee, confidential documents will not be released without informing the court or committee that the supplying company regards them as confidential. Furthermore, the Commission will provide 10 days advance notice of disclosure to the supplier where possible, or, in any event, such advance notice as is feasible under the circumstances. Respondents would permit release of both confidential and nonconfidential documents only in response to a subpoena or "formally authorized" request of a committee or subcommittee, and only upon the FTC's providing notice of receipt of the subpoena or request and a full 10 days advance notice of release, without allowing for diminished notice under any circumstances. *fn3"

 The first issue to be dealt with is a joint respondents' attempt to have the use of the documents restricted to the Exxon proceeding. The court's consideration of this issue will be limited to nonconfidential documents because confidential documents are subject to the notice terms of the Commission's protective order and the parties can challenge their disclosure for other use when the release of particular documents is imminent. *fn4" As to nonconfidential documents, the joint respondents allege that their opponents in other litigation could avoid the discovery procedures of the Federal Rules of Civil Procedure by obtaining documents from the Commission. Respondents contend that such disclosure would violate their due process rights and the fifth amendment. *fn5" The FTC asserts, and this court agrees, that respondents' claims are premature and if protection is indeed warranted, it can be obtained from the courts where the cases are pending rather than involving this court in discovery matters concerning other cases before other courts. See In re FTC Corporate Patterns Report Litigation, 432 F. Supp. 291, 312-13 (D.D.C. 1977), appeal pending, No. 77-1732 (D.C. Cir.); Atlantic Richfield Co. v. FTC, 398 F. Supp. 1, 10 (S.D. Tex. 1975), aff'd, 546 F.2d 646 (5th Cir. ...


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