ALUMINUM CO., ETC. v. UNITED STATES DEPT., ETC., Civ. A. No. 77-1336.

• Decision Date: 18 January 1978
• Docket Number: Civ. A. No. 77-1336.
• Citation: 444 F. Supp. 1342
• Parties: ALUMINUM COMPANY OF AMERICA, Petitioner, v. UNITED STATES DEPARTMENT OF JUSTICE, ANTITRUST DIVISION, and John H. Shenefield, Acting Assistant Attorney General, Respondents.
• Court: U.S. District Court — District of Columbia

444 F. Supp. 1342

ALUMINUM COMPANY OF AMERICA, Petitioner, v. UNITED STATES DEPARTMENT OF JUSTICE, ANTITRUST DIVISION, and John H. Shenefield, Acting Assistant Attorney General, Respondents.

Civ. A. No. 77-1336.

United States District Court, District of Columbia.

January 18, 1978.

Lionel Kestenbaum, Bergson, Borkland, Margolis & Adler, Washington, D. C., for petitioner.

John W. Poole, Jr., Atty., Antitrust Division, U. S. Dept. of Justice, Washington, D. C., for respondents.

MEMORANDUM

GASCH, District Judge.

This action involves a petition by Aluminum Company of America (Alcoa) for an order modifying a Civil Investigative Demand (CID) served on Alcoa by the Antitrust Division of the Department of Justice (Department). Alcoa seeks provisions protecting the confidentiality of its business records and data. The Department contends that such a protective order is precluded by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C.A. §§ 1311-1314 (Supp. 1977) (1976 Amendments), which amended the Antitrust Civil Process Act, 15 U.S.C. §§ 1311-1314 (1970). Moreover, the Department claims that the terms proposed by Alcoa would frustrate the purpose of the 1976 Amendments by creating inflexibility and obstacles to investigations, destroying the intended anonymity of third party deponents, and prematurely revealing investigative leads.

Jurisdiction is premised upon section 1314(b) of Title 15, which provides that a petition for an order modifying or setting aside a demand be filed in the district court. The instant petition is timely, as petitioner sought and obtained an extension from attorneys in the Department and filed the petition within this time period. See 15 U.S.C.A. § 1314(b) (Supp. 1977).

BACKGROUND

On October 31, 1975, Alcoa and fourteen other producers of primary aluminum and other aluminum products were served with Civil Investigative Demands (CIDs) issued pursuant to the Antitrust Civil Process Act, 15 U.S.C. §§ 1311-1314 (1970). The CIDs, which required production of documents relating to the pricing and production of aluminum products, were part of an Antitrust Division investigation to determine whether decisions in late 1974 and 1975 by various aluminum producers to curtail production, rather than reduce prices, of primary aluminum and some fabricated aluminum products resulted from an agreement or agreements to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (Supp. V 1975). The CID (No. 1664) sought production of documents pertaining to the pricing, marketing, and production of aluminum and aluminum products.

In response, Alcoa submitted hundreds of thousands of documents relating to its costs and financial, marketing, pricing, and research and development plans and policies from which the Department selected more than 160,000 pages. Many of the documents selected and copied by the Department contained highly sensitive financial and business data. At the time these documents were produced, however, the governing statute absolutely prohibited disclosure of the documents or their contents in the course of an antitrust investigation (without the consent of the person who produced the documents) except to a "duly authorized officer, member, or employee of the Department of Justice." Antitrust Civil Process Act § 4(c), 15 U.S.C. § 1313(c) (1970).

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, which amended in part the Antitrust Civil Process Act, was enacted on September 30, 1976. The 1976 Amendments expanded the investigatory powers of the Department by authorizing, inter alia, the power to compel oral testimony of any person in the course of an antitrust investigation and the use of documents produced pursuant to a Civil Investigative Demand "in connection with the taking of oral testimony." 15 U.S.C.A. § 1313(c)(2) (Supp. 1977).

On June 10, 1977, the Department issued, pursuant to the 1976 Amendments, Civil Investigative Demand No. 1844, which requested the documents produced under the earlier CID. The underlying purpose of the second CID was to subject the documents to the procedures authorized under the 1976 Amendments. See Letter from John W. Poole, Jr. to Daniel H. Margolis (June 10, 1977).

Alcoa proposed that the Department agree to protect the confidentiality of documents produced in response to the first CID. Alcoa suggested that the Department provide notice to Alcoa and an opportunity to object in advance of any intended disclosure of the documents to third parties. The Department, in refusing to agree to such restrictions, maintained that it could unilaterally decide whether to disclose the documents to third parties during the course of an investigation. It stated:

We do not believe it would be consistent with our enforcement responsibilities or with the Hart-Scott-Rodino Act for us to accept restrictions on the use of CID documents beyond the substantial restraints imposed by that Act or to agree to furnish notice to your company before making the uses of CID documents contemplated therein. We can assure you that we would reveal the documents, or the contents, to third parties only when it was deemed necessary for law enforcement purposes and we would carefully consider the nature of the document and the possible effect on your company and on competition before deciding whether to use a document in such manner.

Letter from Angela L. Hughes to Daniel H. Margolis (July 18, 1977).

Consequently, Alcoa specifically requested this Court to enter an order with the following provisions:

1. To require the Department of Justice, thirty days in advance of any proposed disclosure, to inform Alcoa of any Alcoa document, or the contents thereof, which the Department proposes to disclose to any third person, and the identity of each such third person;

2. To permit Alcoa twenty days to notify the Department if such documents are or contain confidential matter, and to object to their disclosure;

3. To order the Department of Justice not to disclose to any third person any document or information which Alcoa designates as confidential matter without prior authorization from the Court after notice of hearing; and

4. For such other and further relief as this Court may deem appropriate.

Petition of Aluminum Company of America for Order Modifying Civil Investigative Demand to Include Protective Provisions at 6.

MERITS

1. Authority of the Court to Issue a Protective Order.

The first issue before the Court is whether the Hart-Scott-Rodino Antitrust Improvements Act of 1976 precludes the entry of an order restricting disclosure to third parties of documents produced in response to a CID. In order to make this determination, the Court must examine several of the provisions as well as the purposes of the 1976 Amendments to the Antitrust Civil Process Act.

The statute in effect at the time the first CID was sent and the documents were produced absolutely prohibited disclosure to third parties:

The custodian to whom any documentary material is so delivered shall take physical possession thereof, and shall be responsible for the use made thereof . . . While in the possession of the custodian, no material so produced shall be available for examination, without the consent of the person who produced such material, by any individual other than a duly authorized officer, member, or employee of the Department of Justice. * * *

Antitrust Civil Process Act § 4(c), 15 U.S.C. § 1313(c) (1970). In contrast, the 1976 Amendments generally prohibit disclosure to third parties, but this general prohibition is subject to specific exceptions:

Except as otherwise provided in this section, while in the possession of the custodian, no documentary material, answers to interrogatories, or transcripts or oral testimony, or copies thereof, so produced shall be available for examination, without the consent of the person who produced such material, answers, or transcripts, by any individual other than a duly authorized official or employee of the Department of Justice.

15 U.S.C.A. § 1313(c)(3) (Supp. 1977). The specific exception relevant to this proceeding provides:

Notwithstanding paragraph (3) of this subsection, such material, answers, and transcripts may be used by any such official or employee in connection with the taking of oral testimony pursuant to this chapter.

15 U.S.C.A. § 1313(c)(2) (Supp. 1977).

Indeed, the ultimate purpose of the 1976 Amendments was to "increase the effectiveness of antitrust investigations." H.R. Rep. No. 94-1343, 94th Cong., 2nd Sess. 12 (1976), U.S. Code Cong. & Admin. News 1976, pp. 2572, 2606; see S. Rep. No. 94-803, 94th Cong., 2nd Sess. 10 (1976). In order to achieve this result, Congress expanded the investigatory powers of the Division by, among other things, authorizing the Division to issue CIDs for answers to written interrogatories and oral testimony, send CIDs to neutral persons and non-target third parties, as well as use CID material in connection with an investigative deposition. See H.R. Rep., supra, at 2.

However, concomitant with the additional investigatory powers given to the Antitrust Division, Congress provided greater protection for CID recipients. See H.R. Rep., supra, at 3, 12. In contrast to the Antitrust Civil Process Act of 1962, which incorporated only the "grand jury subpoena" standard as a basis for objections to CIDs, the present act sets forth two standards:

No such demand shall require the production of any documentary material, the submission of any answers to written interrogatories, or the giving of any oral testimony, if such material, answers, or testimony would be protected from disclosure under —

(1) the standards applicable to subpenas or subpenas duces tecum issued by a court of the United States in aid of a grand jury investigation, or

(2) the standards applicable to discovery requests under the Federal Rules of Civil Procedure, to the extent that the application of such standards to

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