Exxon Corp. v. FTC

• Decision Date: 19 August 1977
• Docket Number: Civ. A. No. 77-61.
• Citation: 436 F. Supp. 1019
• Parties: EXXON CORPORATION, Gulf Oil Corporation, Mobil Oil Corporation, Standard Oil Company of California, Standard Oil Company (Indiana), Atlantic Richfield Company, and Shell Oil Company, Plaintiffs, v. FEDERAL TRADE COMMISSION, Calvin J. Collier, Chairman, Paul Rand Dixon, Member, David A. Clanton, Member, and M. Elizabeth Hanford Dole, Member, Defendants.
• Court: U.S. District Court — District of Delaware

436 F. Supp. 1019

EXXON CORPORATION, Gulf Oil Corporation, Mobil Oil Corporation, Standard Oil Company of California, Standard Oil Company (Indiana), Atlantic Richfield Company, and Shell Oil Company, Plaintiffs, v. FEDERAL TRADE COMMISSION, Calvin J. Collier, Chairman, Paul Rand Dixon, Member, David A. Clanton, Member, and M. Elizabeth Hanford Dole, Member, Defendants.

Civ. A. No. 77-61.

United States District Court, D. Delaware.

August 19, 1977.

Thomas Herlihy, III, of Herlihy & Herlihy, Wilmington, Del., for plaintiffs; William Simon, John S. Kingdon, Robert G. Abrams, and Stuart H. Harris of Howrey & Simon, Washington, D.C., of counsel for Exxon Corp.; Jesse P. Luton, Jr., and John E. Bailey, Houston, Tex., of counsel for Gulf Oil Corp.; Andrew J. Kilcarr and Thomas R. Trowbridge, III, of Donovan, Leisure, Newton & Irvine, Washington, D.C., and New York City, of counsel for Mobil Oil Corp.; George A. Sears, Richard W. Odgers, C. Douglas Floyd of Pillsbury, Madison & Sutro, San Francisco, Cal., of counsel for Standard Oil Co. of Cal.; William R. Jentes and Tefft W. Smith of Kirkland & Ellis, Chicago, Ill., of counsel for Standard Oil Co. (Indiana); Robert E. Jordan, III, and Richard H. Porter of Steptoe & Johnson, Washington, D.C., of counsel for Atlantic Richfield Co.; J. Wallace Adair and Keith E. Pugh, Jr., of Howrey & Simon, Washington, D.C., of counsel for Shell Oil Co.

Kent Walker, Asst. U. S. Atty., Dept. of Justice, Wilmington, Del., Michael N. Sohn, Gerald P. Norton, Jerold D. Cummins, and William A. Horne, F. T. C., Washington, D.C., for defendants.

MURRAY M. SCHWARTZ, District Judge.

Exxon Corporation ("Exxon"), Gulf Oil Corporation ("Gulf"), Mobil Oil Corporation ("Mobil"), Standard Oil Company of California ("SoCal"), Standard Oil Company (Indiana) ("Indiana"), Atlantic Richfield Company ("Atlantic Richfield") and Shell Oil Company ("Shell") have filed an action in this Court against the Federal Trade Commission ("FTC") and the Commissioners of the FTC ("Commissioners"). All seven plaintiffs are respondents in an FTC proceeding which, briefly stated, charges them with anti-competitive and monopolistic behavior in the refining and marketing of petroleum and petroleum products.¹ The plaintiffs seek declaratory and injunctive relief to protect from disclosure to Congress or the public documents subpoenaed in the FTC proceeding.

Presently before the Court is the defendants' motion to dismiss, based on, inter alia, lack of jurisdiction. Before addressing the merits of the motions, however, the factual background of this case should be outlined.

I. Background

The events which eventually precipitated the filing of this law suit originated with the issuance of certain subpoenas duces tecum by the Administrative Law Judge ("ALJ") presiding over the FTC case. In an order entered on November 11, 1976, the ALJ authorized the subpoenas as part of the initial discovery in the Exxon proceeding. The subpoenas duces tecum hereinafter subpoena were issued on November 24, 1976.

To protect the respondent oil companies against unjustified public disclosure of confidential subpoenaed information, the ALJ issued a protective order on January 6, 1977.² On the same day, the ALJ certified paragraph 9 of the protective order ("paragraph 9") to the Commissioners for their review. See 16 C.F.R. § 23(b). Paragraph 9 describes the procedure to be employed if a request is made for information supplied to the FTC by the respondent oil companies.

On January 31, 1977, the Commissioners issued an order modifying paragraph 9.³ Paragraph 9 provides two different procedures depending on the source of the request for the confidential information. If the FTC receives an official request from a committee or subcommittee of Congress, the FTC is to inform the committee that the company supplying the information deems the matter confidential and is to give the supplying company "ten days' prior notice where possible, and in any event as much advance notice as reasonably can be given."⁴ If the request is made by a private citizen or an individual member of Congress, the FTC is to treat the application as made under the Freedom of Information Act and is to give the supplying company ten days' prior notice of its intent to release the requested information. The notice period is intended to provide the respondents with ample time to seek judicial relief from the impending release.

The various plaintiffs in this action have responded differently to the subpoenas issued on November 24, 1976. Exxon and Gulf have begun production of the subpoenaed materials. Counsel for the FTC stated at oral argument that at present Exxon and Gulf are in compliance.⁵ The record is somewhat unclear as to the precise steps taken by SoCal, Mobil, Indiana, Atlantic Richfield and Shell (hereinafter referred to as "SoCal plaintiffs").⁶ In any event, the SoCal plaintiffs have been deemed by the Commission not to be in compliance. Because FTC subpoenas are not self-executing,⁷ the Commission authorized the Office of General Counsel to seek judicial enforcement.⁸ The enforcement action was filed and is now pending in the District of Columbia.⁹

Dissatisfied with the protective order entered by the Commissioners on January 31, 1977,¹⁰ the plaintiffs filed this action seeking declaratory and injunctive relief which they believe is essential to prevent the unauthorized disclosure of confidential business information to Congress or to the public. Earlier, this Court denied a motion by Gulf and Exxon for a preliminary injunction.¹¹ The defendants have filed a motion to dismiss plaintiffs' amended complaint. The various grounds in support of that motion will be treated seriatim.

II. Jurisdiction Over the Subject Matter

Defendants have moved to dismiss the amended complaint on the grounds that there exists no statutory basis for the Court to exercise jurisdiction. The plaintiffs in their amended complaint allege that statutory jurisdiction is provided by 28 U.S.C. §§ 1331(a), 1337, 1361, the Declaratory Judgment Act¹² and the Administrative Procedure Act.¹³

Neither the Declaratory Judgment Act nor the Administrative Procedure Act provides an independent statutory basis for jurisdiction. It is well-settled that the Declaratory Judgment Act expands the remedies available in the federal courts but does not expand federal jurisdiction. See Skelly Oil Co. v. Phillips Petroleum, 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). Further, the Supreme Court recently has held that the Administrative Procedure Act does not provide an independent basis for federal jurisdiction. See Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977); see also Zimmerman v. United States, 422 F.2d 326 (3d Cir. 1970). Accordingly, the plaintiffs cannot rely on either statute to invoke the jurisdiction of this Court.

Plaintiffs place heavy reliance on 28 U.S.C. § 1331(a) as a jurisdictional basis for this suit.¹⁴ Section 1331(a) provides jurisdiction in cases arising "under the Constitution, laws, or treaties of the United States. . . ." Plaintiffs allege that the defendants lack authority to issue a protective order which provides adequate protection of the plaintiffs' proprietary interests in the subpoenaed material. In support of this contention, the plaintiffs cite, inter alia, the FTC's assertion that it cannot refuse requests for material made by congressional committees.¹⁵ Although, as discussed infra, this Court believes that the plaintiffs' emphasis on the protective order as the sole issue is misplaced, nonetheless, it is apparent that the claims asserted do arise under federal statutes and the United States Constitution. The defendants' argument that no statutory jurisdiction exists because no specific demand for disclosure has been made is more properly treated as part of their contention that no constitutional case or controversy exists. Accordingly, it is held that this Court does have subject matter jurisdiction over this case under 28 U.S.C. § 1331 provided a case or controversy exists within the meaning of Article III. See Exxon Corp. v. FTC, supra, 411 F.Supp. at 1369.

III. Constitutional Jurisdiction — Article III

In its opinion denying the motions of Exxon and Gulf for preliminary injunctions, the Court indicated its concern that the cause of action asserted here might not constitute a case or controversy within the meaning of Article III, Section 2 of the Constitution. This concern derived primarily from the striking juxtaposition of the claim for protection from public disclosure of documents with the representations that there was no imminent threat of any disclosure.¹⁶

The conclusion that a dispute fails to satisfy the case or controversy requirement may result from a variety of jurisdictional defects. In the instant case, the issue can be stated more precisely as a ripeness problem. See Anti-Facist Committee v. McGrath, 341 U.S. 123, 153-56, 71 S.Ct. 624, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring). Defendants suggest two ways in which the subject matter of this suit could ripen into a justiciable controversy: (1) The SoCal plaintiffs could continue to refuse to supply any documents and litigate the issue of the protective order in the context of a subpoena enforcement action.¹⁷ Similarly, Exxon and Gulf could cease complying with their subpoenas and await enforcement. (2) As to documents already supplied, Exxon and Gulf could await notice of impending release and then seek judicial relief under the Freedom of Information Act or other relevant statute.

Plaintiffs contend that defendants misconstrue the substance of the amended complaint. That is, plaintiffs conceive this suit as an attack on the authority and adequacy of the January 31 protective order. Thus, consideration about specific documents and disclosure are irrelevant. Plaintiffs argue that the emphasis the defendants place on the documents represents an ill-disguised...