F.T.C. v. TRW, Inc.

Decision Date03 June 1980
Docket NumberNo. 79-2100,79-2100
Parties, 1980-2 Trade Cases 63,374 FEDERAL TRADE COMMISSION, v. TRW, INC. and its unincorporated division, TRW Credit Data, Appellant.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District Court of Columbia (Misc. 79-0122).

Robert H. Rawson, Jr., Washington, D. C., with whom Richard W. Pogue, Washington, D. C., was on the brief, for appellant.

Warren S. Grimes, Atty., F. T. C., Washington, D. C., with whom Michael N. Sohn, Gen. Counsel, and Jonathan W. Cuneo, Atty., F. T. C., Washington, D. C., were on the brief for appellee. Howard E. Shapiro, Atty., Dept. of Justice, Washington, D. C., also entered an appearance for appellee.

Before McGOWAN, TAMM and ROBB, Circuit Judges.

Opinion for the Court filed by Circuit Judge McGOWAN.

McGOWAN, Circuit Judge:

This appeal is from an order of the District Court enforcing a subpoena duces tecum issued by the Federal Trade Commission. Appellant TRW, Inc. and TRW Credit Data (TRW), its unincorporated division, objected to the production of two classes of documents, claiming a so-called "self-evaluative" privilege and an attorney-client privilege, respectively, against their disclosure. The District Court rejected the two claims of privilege, and we affirm.

I

TRW is a credit reporting agency with numerous branch offices across the nation. It prepares and sells to credit grantors information about credit applicants, including the applicant's credit history and information gathered from public records. Like other credit reporting agencies, TRW is comprehensively regulated by the provisions of the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq. (1976).

The FCRA imposes restrictions on the manner and content of consumer reports, and provides individuals with a means of ensuring that the information being distributed about them is accurate and up to date. Credit reporting agencies are placed under a general obligation to maintain "reasonable procedures to assure maximum possible accuracy" of their consumer reports. 15 U.S.C. § 1681e. Specifically, the statute contains provisions that limit the purposes for which information may be supplied to third parties, 15 U.S.C. § 1681b, and that forbid the disclosure of information older than a certain age, 15 U.S.C. § 1681c. With a few enumerated exceptions, consumers are given a statutory right of access to the information concerning them in the agency's files, the sources of the information, and the parties to whom the information has been disclosed. 15 U.S.C. § 1681g. The FCRA also establishes a procedure by which consumers may challenge the accuracy or completeness of the information collected by the agency. 15 U.S.C. § 1681i. Although private enforcement procedures are available under the FCRA, 1 the FTC has responsibility for the general administrative enforcement of the Act. 2

Pursuant to this authority, and following consumer complaints, the FTC in 1971 began an informal investigation of the credit reporting practices of TRW. By the fall of 1972, TRW was convinced that a complaint by the FTC was imminent. In response, it undertook what it termed a National Consumer Relations Audit (NCRA), the program which generated the first set of documents at issue in this case. Under the NCRA, in-house auditors checked TRW's consumer relations branch offices for compliance with federal and state fair credit reporting laws. The auditors then prepared reports containing their opinions as to compliance with law in the branch offices, as well as an identification of observed problems and suggested solutions. The reports were distributed to the affected branch managers, who submitted written responses outlining any corrective action that would be taken.

The purpose of the program was twofold: (1) to maintain uniform and consistent procedures in the numerous branch consumer relations offices throughout the country, so as to assure overall compliance with federal and state fair credit reporting laws, and (2) to provide management and legal counsel with information to be used in formulating new policies to assure compliance with such laws. In total, one hundred sixty-seven NCRA reports and responses are at issue.

In the summer of 1974, the FTC notified TRW that a substantial formal request for information and documents would soon be made. Following this notification, TRW engaged the Stanford Research Institute (SRI) in March 1975 to prepare a study of the company's complex computerized credit reporting system. A proposal was drawn up and signed by the parties on March 7, 1975, describing with particularity the work to be done by SRI. A preliminary report was submitted by SRI in mid-1975, and a final report in late November. These three documents constitute the second set sought to be protected by privilege from disclosure.

On June 21, 1976, the FTC issued a subpoena duces tecum ordering the production of some fifty categories of documents. TRW moved before the Commission to quash the subpoena, and a revised subpoena was promulgated in response that excluded from its scope twenty-six of the categories previously described. TRW complied with the revised subpoena by producing over thirty thousand pages of documents; it withheld the documents that are the subject of the appeal.

On May 24, 1979, the FTC petitioned the District Court pursuant to the FTC Act, 15 U.S.C. § 49, for an order requiring TRW to produce the withheld documents. Following the submission of briefs and oral argument, the District Court on September 6 issued a Memorandum and Order granting enforcement of the FTC subpoena. Notice of appeal was filed and a stay of the enforcement order was granted upon the posting by TRW of a supersedeas bond in the amount of $150. 3

II
A. The National Consumer Relations Audit Reports and Responses

TRW seeks to protect its NCRA reports and responses by means of a qualified "self-evaluative" privilege designed to encourage confidential self-analysis and self-criticism. The roots of the "self-evaluative" privilege are to be found in Bredice v. Doctor's Hospital, 50 F.R.D. 249 (D.D.C.1970).

In Bredice, a plaintiff in a malpractice action sought in the course of civil discovery to compel production of the minutes and reports of a hospital medical review committee's investigation of the death of a patient. The court noted that there was an "overwhelming public interest" in having the medical review committee's work proceed on a confidential basis, and found that this interest would be comprised by requiring disclosure of the committee's records. See 50 F.R.D. at 251. Accordingly, a qualified privilege against disclosure was fashioned to apply in all but "extraordinary circumstances," id.

A number of other courts have relied upon a "self-evaluative" privilege in diverse factual settings, see, e. g., Keyes v. Lenoir Rhyne College, 552 F.2d 579 (4th Cir. 1977) (private action under Title VII of the Civil Rights Act of 1964); Banks v. Lockheed-Georgia Co., 53 F.R.D. 283 (N.D.Ga.1971) (private employment discrimination suit); New York Stock Exchange v. Sloan, 22 Fed.R.Serv.2d 500 (S.D.N.Y.1976) (private action under the Securities Exchange Act of 1934). More recently, however, courts have appeared reluctant to enforce even a qualified "self-evaluative" privilege. They typically concede its possible application in some situations, but then proceed to find a reason why the documents in question do not fall within its scope. See, e. g., Davidson v. Light, 79 F.R.D. 137 (D.Colo.1978) (report of hospital's infection control committee following discovery of plaintiff's infected and gangrenous leg, Wright v. Patrolmen's Benevolent Association, 72 F.R.D. 161 (S.D.N.Y.1976) (deposition of offices of the state bar association in a civil rights action concerning information collected about plaintiff judge). As the court stated in Lloyd v. Cessna Aircraft Co., 74 F.R.D. 518, 522 (E.D.Tenn.1977), the privilege "at the most remains largely undefined and has not generally been recognized."

Whatever may be the status of the "self-evaluative" privilege in the context of private litigation, courts with apparent uniformity have refused its application where, as here, the documents in question have been sought by a governmental agency. See, e. g., Emerson Electric Co. v. Rumsfeld, 609 F.2d 898 (8th Cir. 1979); United States v. Noall, 587 F.2d 123 (2d Cir. 1978); Reynolds Metal Co. v. Rumsfeld, 564 F.2d 663 (4th Cir. 1977). As a general matter this conclusion makes sense in light of the roots of the privilege in the public interest, and the strong public interest in having administrative investigations proceed expeditiously and without impediment "(T)he 'very backbone of an administrative agency's effectiveness in carrying out the congressionally mandated duties of industry regulation is the rapid exercise of the power to investigate. . . . ' " FTC v. Texaco, Inc., 180 U.S.App.D.C. 390, 400, 555 F.2d 862, 872 (D.C.Cir.) (en banc ), cert. denied, 431 U.S. 974, 97 S.Ct. 2940, 53 L.Ed.2d 1072 (1977), quoting FMC v. Port of Seattle, 521 F.2d 431, 433 (9th Cir. 1975). This important governmental interest in the expeditious investigation of possible unlawful activity would be undermined if a party could use a subpoena enforcement action to raise the full panoply of objections to an administrative proceeding, see Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 213, 66 S.Ct. 494, 508, 90 L.Ed. 614 (1946).

FTC v. Anderson, 631 F.2d 741 at 744-745 (D.C.Cir. 1979).

An independent reason for declining to apply a "self-evaluative" privilege in this case is presented by the fact that the documents were sought pursuant to an FTC subpoena. In United States v. Noall, 587 F.2d 123 (2d Cir. 1978), Judge Friendly found any "self-evaluative" privilege inapplicable in the context of a proceeding to...

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