Exxon Corp. v. F.T.C.

• Citation: 663 F.2d 120
• Decision Date: 03 October 1980
• Docket Number: No. 79-1995,79-1995
• Parties: , 1980-81 Trade Cases 63,577 EXXON CORPORATION, Appellant v. FEDERAL TRADE COMMISSION, et al.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 120

663 F.2d 120

213 U.S.App.D.C. 356, 1980-81 Trade Cases 63,577

EXXON CORPORATION, Appellant v. FEDERAL TRADE COMMISSION, et al.

No. 79-1995.

United States Court of Appeals, District of Columbia Circuit.

Argued March 26, 1980.

Decided October 3, 1980.

Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 78-0530).

Robert G. Abrams, Washington, D. C., with whom William Simon, John S. Kingdon, Stuart H. Harris and R. Bruce Beckner, Washington, D. C., were on the brief, for appellant.

Burton D. Fretz, Atty., Dept. of Justice, Washington, D. C., with whom Alice Daniel, Asst. Atty. Gen., Charles F. C. Ruff, U. S. Atty., Leonard Schaitman, Atty., Dept. of Justice, Washington, D. C., were on the brief, for appellees.

Before WRIGHT, Chief Judge, SWYGERT ^*, United States Circuit Judge for the Seventh Circuit, and ROBINSON, Circuit Judge.

Opinion for the Court filed by Circuit Judge SWYGERT.

SWYGERT, Circuit Judge:

This appeal in a suit brought under the Freedom of Information Act ¹ presents two questions. The first is whether the district court erred by denying plaintiff Exxon Corporation's motion for discovery under Rule 56(f), Fed.R.Civ.P., concerning possible waiver by the Federal Trade Commission of its claimed exemption under the Act. Exxon contends that, as a result of that denial, the district court prematurely considered the FTC's motion for summary judgment solely on the basis of the Commission's affidavits. The second is whether the district court correctly granted summary judgment in favor of the FTC. Because we conclude that the court did not err on either point, we affirm.

I

On July 18, 1973, the FTC issued an administrative complaint against the eight leading companies in the petroleum industry, including Exxon, alleging that the companies have monopolized the domestic refinery industry in violation of the Federal Trade Commission Act, 15 U.S.C. § 45 (1976). In preparing for the prosecution of the so-called "Exxon case," ² which is presently in the pretrial discovery phase, the FTC has hired a number of economists who are furnishing advice and assistance on issues and strategic options relevant to the trial. Much of their advice has been placed on paper in a "Final Economic Report," which the FTC describes as an "in-depth evaluation of aspects of the theory of the case and the evidence supporting these aspects, discussions of possible future litigation strategies, and areas of possible inquiry for further economic analysis." ³

Exxon, understandably anxious to obtain a copy of the Economic Report and to learn the identities of the six economists who prepared it, has pursued two routes attempting to achieve those ends: one in federal court and the other in the agency adjudicative proceeding. On October 25, 1977, Exxon made a Freedom of Information Act request for all materials relating to the Exxon case "which constitute, refer or relate to any oral or written communication made between January 1, 1977 to (October 25, 1977)": (a) between any Commissioner of the FTC (or any member of the Commissioner's staff) and any FTC employee, (b) between any Commissioner (or staff member) and any private party, and (c) between any FTC employee and any private party. ⁴ In response, by letter from the Secretary of the FTC, partial access to the approximately eight hundred pages of responsive documents not in the public records was permitted. After Exxon appealed that decision within the agency, the Commission released additional documents. The remaining documents, which constitute approximately 375 pages or 47 percent of the responsive data not in the public records, were withheld by the FTC on the basis of Exemptions 5 and 7 of the Act. ⁵ Following that decision of the FTC, on March 24, 1978, Exxon initiated this Freedom of Information Act litigation in the district court.

On April 17, 1978, the same day that the FTC was served with the federal complaint, ⁶ Exxon filed a motion with the Administrative Law Judge in the FTC adjudicative proceeding seeking the issuance of a subpoena duces tecum to direct complaint counsel, Roger B. Pool, to produce the Economic Report. On June 2, 1978, the Administrative Law Judge denied the motion on the ground that the Economic Report constituted attorney work product and therefore not producible under the relevant discovery rules.

Meanwhile, in the district court, Exxon began a series of aborted discovery efforts. On April 19, 1978, Exxon served Michael Sohn, FTC General Counsel, and Carol Thomas, Secretary, with a first set of interrogatories; on May 4, 1978, Exxon served the FTC with a notice of the deposition of Kenneth Elzinga, an economics professor at the University of Virginia who, according to Exxon, was one of the contributors to the Economic Report. The FTC responded by moving for a protective order as to both the interrogatories and the deposition. On May 19, 1978, a hearing was held in the district court. At that time, Exxon stated it was attempting to discover information that might support a theory that the FTC had waived any protection under Exemption 5 of the Act for the Economic Report by disclosing portions of the document to a Commissioner in violation of the Commission's Rules of Practice. Rule 4.7 of the Commission's Rules of Practice, 16 C.F.R. § 4.7 (1980), prohibits ex parte communications concerning the merits of an agency adjudicative proceeding between the decisionmakers and interested persons outside of the agency. The rule also prohibits certain additional classes of communications from being made off the record. In an adjudicative proceeding, communications between members of the Commission and either investigating or prosecuting employees of the Agency or outside parties which relate to the merits of the proceeding may not be made ex parte. If such a communication does occur, the communication must be placed on the public record pursuant to Rule 4.7(c). ⁷ According to Exxon, if such communications had occurred in this case, the Economic Report could no longer be protected from disclosure. No mention of this theory had appeared up to that time in court papers; nor had it been argued before the Administrative Law Judge. After the hearing, the district court denied the motion as to the interrogatories, but, although ordering that Professor Elzinga not be deposed at that time, did not decide plaintiff's right to a deposition after the FTC had filed its motion to dismiss or, in the alternative, for summary judgment. Exxon immediately moved to compel the General Counsel and Secretary to answer the interrogatories.

The defendants then filed objections to Exxon's interrogatories with the district court on the grounds that the individual defendants were not proper parties to the case under 5 U.S.C. § 552(a)(4)(B) ⁸ and that the requested information enjoyed the work product privilege. Next, on June 15, 1978, the FTC moved for dismissal, or in the alternative, summary judgment. The motion was accompanied by supporting memoranda, an index to the responsive documents, and affidavits of the chief complaint counsel, Roger Pool, and the Secretary of the FTC, Carol Thomas.

Exxon responded to the FTC's motion with a motion for limited discovery under Rule 56(f), Fed.R.Civ.P. ⁹ Although Exxon did not articulate in the motion a basis for its request, the purpose can be extracted from the depositions upon written questions that Exxon sought from each of the four Commissioners who held office at the time this litigation was initiated. ¹⁰ The questions concerned the Commissioners' exposure, if any, to the Economic Report and oral communications between the Commissioners and any other person concerning issues in the Exxon case. Exxon also requested the depositions upon oral examination of Professor Elzinga, Keith Golden, an FTC paralegal who was primarily responsible for the search of the requested documents, and Roger Pool. The FTC then filed a motion for close of discovery or, in the alternative, for a protective order on the basis that "further discovery would at best only be cumulative and would be of no help to plaintiff in its further prosecution of the case." ¹¹ On July 31, 1978, Exxon again responded, this time more fully, to the FTC's motion for summary judgment, stating it was unable to respond to the motion without first obtaining facts.

Following the filing of the parties' motions, a hearing was held in district court. On August 11, 1978, the court stayed discovery pending a determination of the summary judgment motion. Exxon, tenacious in its discovery efforts, then filed two supplemental Rule 56(f) affidavits. The first contended that the FTC in the index to documents attached to its summary judgment motion admitted that ex parte communications had in fact occurred between the Commissioners and the staff with respect to the Exxon case-the substance of which had not been put in the public record. The second stated that its request for limited discovery was further justified on two grounds: (1) an article appearing in a private trade publication that revealed a meeting between Chairman Michael Pertschuk and several economists allegedly involved in the Economic Report during the period the economists were under contract to evaluate the Exxon case, and (2) a letter released to Exxon from the assistant director of the Bureau of Competition to a private citizen that mentioned the Exxon case and had a handwritten notation that the letter had been sent to the Office of the Chairman.

Despite the additional affidavits, the district court in its partial summary judgment order of November 17, 1978 rejected Exxon's argument that it was entitled to pursue discovery by written interrogatories and oral depositions under Rule 56(f). Exxon Corp. v. FTC, 466 F.Supp. 1088 (D.D.C.1978). Concerning the request to discover facts about any ex parte communications and possible waiver of the FTC's Exemption 5 claim, ...