F. T. C. v. Atlantic Richfield Co., 76-1056
| Decision Date | 12 April 1977 |
| Docket Number | No. 76-1056,No. 76-0126,No. 741-0019,76-1056,741-0019,76-0126 |
| Citation | 567 F.2d 96,185 U.S.App.D.C. 229 |
| Parties | , 1977-2 Trade Cases 61,564 FEDERAL TRADE COMMISSION v. ATLANTIC RICHFIELD COMPANY et al., Appellants. . Argued 18 March 1977. Decided 25 July 1977. Robert E. Jordan III, Washington, D. C., with whom Henry B. Weaver, Robert M. Goolrick, Edward E. Vaill, Los Angeles, Cal., and Steven H. Brose, Washington, D. C., were on the brief, for appellants. W. Baldwin Ogden, Atty., F. T. C., Washington, D. C., with whom Gerald P. Norton, Deputy Gen. Counsel, Gerald Harwood, Asst. Gen. Counsel, and L. Jorn Dakin, Atty., F. T. C., Washington, D. C., were on the brief, for appellee. Before McGOWAN, ROBINSON and WILKEY, Circuit Judges. Opinion for the Court filed by Circuit Judge WILKEY. Opinion filed by Circuit Judge SPOTTSWOOD W. ROBINSON, III, concurring in part and dissenting in part. WILKEY, Circuit Judge: This appeal is from an order of the District Court (Green, J.) of 24 November 1975 commanding Atlantic Richfield Company to comply with a subpoena duces tecum issued by a member of the Federal Trade Commission investigative staff, and from other ancillary orders. For the reasons which follow, we reverse and remand the case to the District Court with instructions to remand further to the Federal Trade Commission for proceedings as outlined herein and not inconsistent with this opinion. I. PROCEDURAL BACKGROUND Basic to our action here is the fact that there are two proceedings being carried on simultaneously by the Federal Trade Commission. Chronologically, the first arises from a 1973 complaint styled In the Matter of Exxon Corporation, et al. 1 This is an adjudicative proceeding and is now and has been for some time in the hands of an Administrative Law Judge. The second is an investigative proceeding pursuant to an FTC resolution authorizing its staff to gather information on the structure, conduct, and performance of the natural gas industry. 2 This was launched on 13 March 1975 by four subpoenas duces tecum issued by a member of the FTC investigative staff to appellant A |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Robert E. Jordan III, Washington, D. C., with whom Henry B. Weaver, Robert M. Goolrick, Edward E. Vaill, Los Angeles, Cal., and Steven H. Brose, Washington, D. C., were on the brief, for appellants.
W. Baldwin Ogden, Atty., F. T. C., Washington, D. C., with whom Gerald P. Norton, Deputy Gen. Counsel, Gerald Harwood, Asst. Gen. Counsel, and L. Jorn Dakin, Atty., F. T. C., Washington, D. C., were on the brief, for appellee.
Before McGOWAN, ROBINSON and WILKEY, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKEY.
This appeal is from an order of the District Court (Green, J.) of 24 November 1975 commanding Atlantic Richfield Company to comply with a subpoena duces tecum issued by a member of the Federal Trade Commission investigative staff, and from other ancillary orders. For the reasons which follow, we reverse and remand the case to the District Court with instructions to remand further to the Federal Trade Commission for proceedings as outlined herein and not inconsistent with this opinion.
Basic to our action here is the fact that there are two proceedings being carried on simultaneously by the Federal Trade Commission. Chronologically, the first arises from a 1973 complaint styled In the Matter of Exxon Corporation, et al. 1 This is an adjudicative proceeding and is now and has been for some time in the hands of an Administrative Law Judge. The second is an investigative proceeding pursuant to an FTC resolution authorizing its staff to gather information on the structure, conduct, and performance of the natural gas industry. 2 This was launched on 13 March 1975 by four subpoenas duces tecum issued by a member of the FTC investigative staff to appellant Atlantic and three others, Continental Oil Company, Getty Oil Company, and Cities Service Company (CAGC companies). The adjudicative proceeding rests on a complaint alleging violations of the antitrust laws; the investigative proceeding is an energy study called for by Congress. Although Atlantic is the only named party common to both proceedings, it is agreed that the two proceedings will necessarily cover much of the same ground, particularly in regard to the existence and operation of joint ventures among the four companies. Since Atlantic is the only one of the four CAGC companies named as a defendant in the Exxon adjudicative proceeding, it is only Atlantic which has concerned itself with the procedure by which documentary material obtained in the energy study investigation will be used in the Exxon adjudicative proceeding; that concern logically extends not only to documents obtained from Atlantic itself, but also to material derived from the other three companies, to the extent the prosecutorial staff in the Exxon proceeding is to have access to it.
Without detailing the exact procedural ploys of each party in the earlier rounds of legal combat before the Trade Commission, in the United States District Court for the Southern District of Texas, and in the Fifth Circuit, it is sufficient for this appeal to make clear that the principal issue centered around the repeated efforts of Atlantic to segregate and sequester documents obtained by the FTC by the power of its investigative subpoena, to keep them from being furnished to the prosecutorial staff in the adjudicative proceeding without the Administrative Law Judge and defendant Atlantic pursuant to the rules of the FTC itself, being given the opportunity respectively to pass upon and object to the acquisition of documents by the FTC prosecutorial staff. Atlantic maintains that it has not sought to block the subpoenas in the investigative proceeding indeed, as a result of the decision of the United States District Court for the District of Columbia, Atlantic and the other three companies have complied completely and furnished all documents called for to the investigative staff but, rather, Atlantic has sought and is still seeking to separate the investigative and adjudicative proceedings, at least to the extent that the adjudicative proceeding will go forward under the normal FTC rules of discovery and evidence.
Atlantic's initial step on 4 April 1975 was to file with the Commission itself a motion either to quash each of the four subpoenas or, alternatively, to issue an order precluding any FTC complaint counsel staff member participating in the prosecution of the pending Exxon adjudicative proceeding from having access to any documents or information obtained through the challenged investigative subpoenas, except by the usual required application to the Administrative Law Judge in the adjudicative proceeding. 3 In support of this motion Atlantic presented two arguments to the Commission. First, Atlantic contended that the use of the investigative subpoena material in the adjudicative proceeding would be violative of procedural due process as guaranteed by the Fifth Amendment to the United States Constitution. 4 Although this due process argument concerns us, and we take note of it in a later stage of our analysis, 5 it is Atlantic's second argument which is of central concern to us. This second argument is premised on the contention that the FTC's procedural rules, as promulgated by the Commission itself, prohibit access by the prosecutorial staff to the documents obtained through the investigative subpoena. The nature of Atlantic's argument in this regard is important to the disposition of this case.
In making its argument with respect to the FTC rules, Atlantic does not point to a specific rule which it believes prohibits the transfer of documents from the investigative staff to the prosecutorial staff. Rather, Atlantic's argument is grounded on the structure and scheme of the Commission rules. The Commission has, in stating its rules of practice, clearly separated the rules relating to nonadjudicative procedures (such as investigations) from those dealing with adjudicative proceedings. In these separate sets of rules, the Commission has established independent mechanisms for discovery in investigative and adjudicative proceedings which differ from each other in substantial degree. Atlantic contends that the Commission's prosecutorial staff must operate entirely within the framework of the prescribed adjudicative rules of practice in conducting discovery for an adjudicative proceeding. That is, Atlantic believes that the structure of the rules, and not any particular rule, compel the conclusion that the prosecutorial staff is not legally free to obtain documents from the investigative staff outside the normal channels of adjudicative discovery. 6
In a letter to Atlantic's counsel on 12 May 1975, the Commission denied Atlantic's motion. In so doing, the Commission pointed out that the energy study was initiated in good faith (unquestioned by Atlantic here) 7 and, further, that there is
no reason to suppose that the Administrative Law Judge presiding over the Exxon proceedings would receive into evidence any documents which had been obtained by way of irregular, "backdoor" discovery, rather than through ordinary discovery channels . . . (T)he Commission necessarily exercises both investigatory and adjudicative duties and is entitled to the presumption that it will not rely on extra-record evidence in deciding cases.
In light of all the circumstances, the substantial administrative burden which would be occasioned by sequestering information within groups of staff attorneys engaged in Commission activities is unwarranted.
The resolution pursuant to which the subpoenas duces tecum were issued does not authorize or invite the use of investigative subpoenas for discovery in (the Exxon proceeding). While the resolution does reserve the Commissions' right to use subpoenaed material in connection with particular law enforcement investigations, the Exxon proceeding is plainly not an investigative matter. 8
Two points need to be made concerning the Commission's response to Atlantic's motion of 4 April 1975. First, the response is ambiguous. Although the result itself, taken alone, could easily be read to stand for the proposition that transfer between the investigative and prosecutorial staffs is in no way prohibited, there is language in the response to indicate a more cautious approach which closely resembles the relief requested by Atlantic. Because of this ambiguity, we have no clear and definitive expression from the Commission concerning this very important issue. Although the Commission itself has been ambiguous in dealing with this issue, we have no doubt as to the position taken by FTC counsel before this court. It is beyond doubt that FTC counsel here are now asserting that the subpoenaed documents from the energy study investigation will be turned over to the prosecutors in the Exxon adjudicative proceeding, without notice to Atlantic and without permission of the Administrative Law Judge. FTC counsel's argument to this court orally and in brief, was based on the thesis that there exists no bar whatsoever to this transfer. 9 In the light of these representations, it appears virtually certain that there will be free transferability in the Exxon proceeding with respect to the materials obtained through the investigative subpoena. Thus, the ambiguity and lack of clarity in the Commission's official position as expounded in the letter to Atlantic's counsel weighs heavily in our decision to remand. Just as we may not rely on the post hoc rationalizations by counsel to justify agency action, we cannot rely on counsel's clearer and more comprehensive statements of...
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