F. T. C. v. Owens-Corning Fiberglas Corp.

• Citation: 200 U.S.App.D.C. 102,626 F.2d 966
• Decision Date: 13 March 1980
• Docket Number: Nos. 79-1167,79-1443,OWENS-CORNING,s. 79-1167
• Parties: , 1980-1 Trade Cases 63,228 FEDERAL TRADE COMMISSION v.FIBERGLAS CORPORATION et al., Appellants, v. Michael PERTSCHUK et al. FEDERAL TRADE COMMISSION, Appellant, v.FIBERGLAS CORPORATION et al.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 966

626 F.2d 966

200 U.S.App.D.C. 102, 1980-1 Trade Cases 63,228

FEDERAL TRADE COMMISSION v. OWENS-CORNING FIBERGLAS CORPORATION et al., Appellants, v. Michael PERTSCHUK et al.

FEDERAL TRADE COMMISSION, Appellant, v. OWENS-CORNING FIBERGLAS CORPORATION et al.

Nos. 79-1167, 79-1443.

United States Court of Appeals, District of Columbia Circuit.

Argued Dec. 11, 1979.

Decided March 13, 1980.

Richard M. Rindler, Washington, D. C., with whom Gilbert E. Geldon, Daniel J. Plaine, Alan S. Ward, John Lewis Smith, III, and Shirley Johnson, Washington, D. C., were on the brief, for appellants in No. 79-1167 and appellees in No. 79-1443.

Warren S. Grimes, Atty., F. T. C., Washington, D. C., with whom Michael N. Sohn, Gen. Counsel, and Leslie Rice Melman, Atty., F. T. C., Washington, D. C., were on the brief, for appellee in No. 79-1167 and cross-appellant in No. 79-1443.

Before TAMM and WALD, Circuit Judges, and HAROLD H. GREENE, ^* U. S. District Judge for the District of Columbia.

Opinion for the court filed by Circuit Judge TAMM.

Opinion concurring in part and dissenting in part filed by Circuit Judge WALD.

TAMM, Circuit Judge:

This case comes before us on cross-appeals from an order of the United States District Court for the District of Columbia that enforced, subject to certain conditions, three subpoenas duces tecum issued by the Federal Trade Commission. The appellants, respondents in the enforcement action, seek further protections against public disclosure of trade secrets that they assert appear in the documents under subpoena. The Commission disagrees and, in addition, argues that the district court exceeded its authority by attaching conditions to the subpoenas beyond those appearing in the Commission's original orders. We conclude that the issues presented by the appellant are either meritless or not yet ripe for review and that the protective conditions added by the district court are unwarranted. We therefore affirm the order insofar as it enforces the subpoenas as issued, and we vacate those portions of the order that impose further restrictions.

I. BACKGROUND

The facts in this case are straightforward. As part of a nonpublic antitrust investigation of the insulation industry, the Commission staff in July of 1977 issued virtually identical subpoenas duces tecum to Owens-Corning Fiberglas Corporation, Johns-Manville Corporation, and CertainTeed Corporation, the appellants herein. The subpoenas asked for various documents containing technical, business, and financial information about the three companies. After meetings with members of the Commission staff produced mutually satisfactory modifications, the appellants submitted nonconfidential documents to the Commission. They refused, however, to turn over certain other documents that they claimed contain trade secrets. ¹

The Commission agreed to afford the withheld documents confidential treatment under its customary procedures for handling such information. ² Specifically, it committed itself to giving the company that submitted a document ten days' notice before disclosing its contents to anyone outside the Commission. The Commission nevertheless excepted from this procedure official requests from courts or arms of Congress. In these instances, it promised "ten days' prior notice where possible, and in any event as much notice as can reasonably be given." Joint Appendix (J.A.) at 233, 237, 311, 315 (letters from the Commission staff to appellants' counsel). Subsequently, the appellants tendered additional documents, but they still refused to surrender the rest without further assurances of confidentiality.

On October 23, 1978, the Commission filed a petition in the district court for an order to enforce the subpoenas under section 9 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 49 (1976). The appellants, respondents in the district court, filed substantially identical counterclaims asking for a declaration that the documents contain trade secrets within the meaning of the Trade Secrets Act, 18 U.S.C. § 1905 (1976), ³ and section 6(f) of the FTC Act, 15 U.S.C. § 46(f) (1976), ⁴ and that the documents are exempt from release under the Freedom of Information Act (FOIA), 5 U.S.C. § 552 (1976). They also sought a protective order that would provide additional guarantees of confidentiality. ⁵ On January 31, 1979, the court entered an order dismissing the counterclaims and enforcing the subpoenas subject to the Commission's promised procedures regarding confidentiality, with two additions. First, the order requires the Commission in the case of a congressional or a judicial request "immediately, forthwith upon receipt by it of such a request, (to) advise the respondent which had furnished the document, by telephone and by a written communication, that the request has been made and indicate the nature and extent of the request." FTC v. Owens-Corning Fiberglas Corp., Misc. No. 78-313, at 2 (D.D.C. Jan. 31, 1979) (order enforcing subpoenas), reprinted in J.A. at 11, 12. Second, in the case of congressional requests the order obliges the Commission to "verif(y) that the request is made in accordance with the controlling congressional rule, and (to advise) the requestor that the respondent has claimed that the document contains confidential trade secrets." Id. This order is now before us on cross-appeals, the appellants contending that the district court did not go far enough and the Commission that it went too far.

II. COMMISSION DISCLOSURE OF CONFIDENTIAL INFORMATION

Before embarking on an analysis of the particular arguments raised by the parties, we believe it useful to recapitulate in general terms the law governing Commission disclosure of information contained in confidential documents it has obtained under subpoena. Specifically, appellants are troubled by requests from two sources, Congress and the general public. ⁶ We therefore shall review the Commission's formal release of secret information to these groups, either voluntarily or pursuant to some request that by law it must grant.

A. Congressional Requests

Recently this court has had several occasions to discuss congressional requests for confidential documents in the hands of the Commission. In particular, we have held explicitly that the Commission may not deny Congress access to confidential documents, including those that contain trade secrets. E. g., Exxon Corp. v. FTC, 589 F.2d 582, 585-86 (D.C. Cir. 1978), cert. denied, 441 U.S. 943, 99 S.Ct. 2160, 60 L.Ed.2d 1044 (1979); Ashland Oil, Inc. v. FTC, 548 F.2d 977, 979 (D.C. Cir. 1976). Release to a congressional requestor is not a public disclosure forbidden by section 6(f) of the FTC Act. Exxon Corp. v. FTC, 589 F.2d at 589; Ashland Oil, Inc. v. FTC, 548 F.2d at 979. Moreover, courts may not require the Commission to delay surrendering documents to Congress to notify affected parties in advance, for the judiciary must refrain from slowing or otherwise interfering with the legitimate investigatory functions of Congress. FTC v. Anderson, No. 78-1032 (D.C.Cir. Sept. 17, 1979); Exxon Corp. v. FTC, 589 F.2d at 588-89. Once documents are in congressional hands, "courts must presume that the committees of Congress will exercise their powers responsibly and with due regard for the rights of affected parties." Id. at 589 (citing Ashland Oil, Inc. v. FTC, 548 F.2d at 979). ⁷ A court may not block disclosure of information in Congress's possession, at least when the disclosure would serve a valid legislative purpose. Doe v. McMillan, 412 U.S. 306, 93 S.Ct. 2018, 36 L.Ed.2d 912 (1973) (construing the speech and debate clause, U.S.Const. art. I, § 6, cl. 1). ⁸

B. Public Requests Under the FOIA

Members of the public also may obtain information from agency "records" under the Freedom of Information Act. See 5 U.S.C. § 552(a)(3) (1976). ⁹ An agency must release the material sought unless it falls within an exemption found in the statute. See id. § 552(b)-(c). The fourth such exemption permits an agency to withhold "trade secrets and commercial or financial information obtained from a person and privileged or confidential. . . ." Id. § 552(b) (4). The exceptions listed in the FOIA do not prohibit an agency from releasing material sought; they only allow the agency to deny access. Chrysler Corp. v. Brown, 441 U.S. 281, 293, 99 S.Ct. 1705, 1713, 60 L.Ed.2d 208 (1979). Nevertheless, the Trade Secrets Act ¹⁰ expressly forbids an agency to release trade secrets or other confidential information in its possession, except as authorized by law. See id. at 290-94, 99 S.Ct. at 1712-14.

Upon receiving a request for a document in its possession, the agency itself decides in the first instance whether it includes trade secrets or other confidential information. If the agency concludes that the document is not confidential, it must release the information. The party that submitted the document, however, may challenge in court the agency's evaluation and decision to release as "agency action . . . not in accordance with law" under 5 U.S.C. § 706(2)(A) (1976), because release of protected information would violate the Trade Secrets Act. Chrysler Corp. v. Brown, 441 U.S. at 318, 99 S.Ct. at 1726. ¹¹ On the other hand, if the agency believes it should withhold the document as confidential, the public requestor may file an action in a federal district court to compel its disclosure under 5 U.S.C. § 552(a)(4) (1976). Thus, no matter what conclusion the agency reaches concerning the confidential status of the information, the losing party may seek judicial review of this decision.

III. PRESENT DETERMINATION OF THE DOCUMENTS' STATUS AS TRADE SECRETS

The appellants argue first that we should require the Commission to determine now, in advance of any request for information, whether the documents contain any trade secrets. The appellants believe that such a determination would carry more weight with members of Congress and their staffs and thus...