F. T. C. v. Anderson

• Decision Date: 17 September 1979
• Docket Number: Nos. 78-1032,78-1048,s. 78-1032
• Citation: 203 U.S.App.D.C. 159,631 F.2d 741
• Parties: , 1979-2 Trade Cases 62,837 FEDERAL TRADE COMMISSION et al. v. Robert O. ANDERSON, Atlantic Richfield Company, Rawleigh Warner, Mobil Oil Corporation, John F. Bookout, Shell Oil Company, Howard J. Haynes, Standard Oil Company of California, John E. Swearingen, Standard Oil Company (Indiana), Appellants. FEDERAL TRADE COMMISSION v. Robert O. ANDERSON et al., Maurice F. Granville and Texaco, Inc., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 741

631 F.2d 741

203 U.S.App.D.C. 159, 1979-2 Trade Cases 62,837

FEDERAL TRADE COMMISSION et al. v. Robert O. ANDERSON, Atlantic Richfield Company, Rawleigh

Warner, Mobil Oil Corporation, John F. Bookout, Shell Oil

Company, Howard J. Haynes, Standard Oil Company of

California, John E. Swearingen, Standard Oil Company

(Indiana), Appellants.

FEDERAL TRADE COMMISSION v. Robert O. ANDERSON et al., Maurice F. Granville and Texaco, Inc., Appellants.

Nos. 78-1032, 78-1048.

United States Court of Appeals District of Columbia Circuit.

Argued Jan. 15, 1979.

Decided Sept. 17, 1979.

Appeals from the United States District Court for the District of Columbia. (D.C. Misc. No. 77-0161).

Richard H. Porter, Washington, D. C., with whom Robert E. Jordan, III, Washington, D. C., and Edward E. Vaill, Los Angeles, Cal., were on brief, for appellants, Atlantic Richfield Co. and Robert O. Anderson, in No. 78-1032.

Thomas R. Trowbridge, III, New York City, Andrew J. Kilcarr and Vincent Tricarico, Washington, D. C., were on brief, for appellants, Mobil Oil Corp. and Rawleigh Warner, in No. 78-1032.

J. Wallace Adair and James R. Fox, Washington, D. C., were on brief, for appellants, Shell Oil Co. and John F. Bookout, in No. 78-1032.

George A. Sears, San Francisco, Cal., David J. McKean, Rufus E. Wilson, Robert L. Williams, Washington, D. C., were on brief, for appellants, Standard Oil Co. of California and Howard J. Haynes, in No. 78-1032.

James M. Johnstone, Washington, D. C., was on brief, for appellants, Standard Oil Co. (Indiana) and John E. Swearingen, in No. 78-1032.

Milton J. Schubin, New York City, a member of the bar of the Supreme Court of the United States pro hac vice by special leave of Court with whom Robert F. McGinnis, New York City, and Frank H. Strickler, Washington, D. C., and Milton Handler, New York City, were on brief, for appellants, Texaco, Inc. and Maurice F. Granville, in No. 78-1048.

Gerald P. Norton, Deputy Gen. Counsel, Washington, D. C., with whom Michael N. Sohn, Gen. Counsel, W. Dennis Cross, Asst. Gen. Counsel and Joanne L. Levine and William A. Horne, Attys., F. T. C., Washington, D. C., were on brief, for appellees.

Before LEVENTHAL, ROBINSON and ROBB, Circuit Judges.

Opinion for the Court filed by Circuit Judge LEVENTHAL.

Concurring opinion filed by Circuit Judge SPOTTSWOOD W. ROBINSON, III.

LEVENTHAL, Circuit Judge:

This case is before the court on consolidated appeals filed by the joint respondents and Texaco. ¹ The appellants seek review of a district court order granting enforcement of six administrative subpoenas duces tecum issued by the Federal Trade Commission. FTC v. Anderson, 442 F.Supp. 1118 (D.D.C.1977). The decision of the district court is affirmed in part and remanded in part.

I. BACKGROUND

The subpoenas arose out of an adjudicative proceeding entitled In the Matter of Exxon Corp., et al., FTC Docket No. 8934. The administrative complaint alleged violations of section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 (1976). In sum, the complaint charged the appellant oil companies, along with Exxon Corporation and Gulf Oil Company, ² with having maintained a noncompetitive market structure and having exercised monopoly power in the refining and distribution of crude oil and petroleum products in the eastern and Gulf Coast regions of the United States.

On November 24, 1976, an administrative law judge (ALJ) issued substantially identical subpoenas duces tecum to the appellant companies and their chief executive officers. The information sought related to the companies' organizational structures, record keeping systems and refining operations.

On January 4, 1977, the ALJ, in response to appellants' motions and pursuant to 16 C.F.R. § 3.42(c) (1977), issued a protective order. The ALJ then certified portions of the order for appeal to the entire Commission, ³ which made some modifications in the order. It was in this form that the subpoenas were enforced by the district court.

II. JUDICIAL ENFORCEMENT OF ADMINISTRATIVE SUBPOENAS

Under section 9 of the FTC Act, 15 U.S.C. § 49 (1976), a district court has jurisdiction to enforce a subpoena issued by the Commission. Although a district court's enforcement function is "neither minor nor ministerial," Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 217 n. 57, 66 S.Ct. 494, 90 L.Ed. 614 (1946), it is a strictly limited one. "(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 (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., supra, 327 U.S. at 213, 66 S.Ct. 494. The enforcement court's function is limited to determining "if the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant." United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 369, 94 L.Ed. 401 (1950). Any other defects in the agency's procedures may be considered only in the context of an appeal from the final decision of the agency in the adjudicative proceeding. FTC v. Atlantic Richfield Co., 185 U.S.App.D.C. 229, 240, 567 F.2d 96, 107 (1977).

III. TEXACO'S CLAIMS

Texaco's principal attack on its subpoena is that the Commission violated its own discovery rules. In approving the subpoenas at issue, the ALJ held that the Commission's rules governing adjudicative subpoenas, 16 C.F.R. § 3.34(b) (1977), authorized discovery of "documents which may be evidentiary or which reasonably may lead to the uncovering or understanding of evidentiary documents." Texaco Appendix at 71-72 n. 51. Texaco contends that the Commission's rules permit post complaint discovery of only those documents that "constitute or contain" relevant evidence.

In support of its interpretation of the Commission's discovery rules, Texaco cites an opinion of another Commission ALJ in another FTC matter. Texaco Brief at 35-36. But the fact that another ALJ in an unrelated proceeding had a different interpretation of the regulations establishes nothing more than the existence of a conflict within the Commission regarding the scope of its discovery rules. Texaco has cited nothing to indicate that the Commission has adopted the interpretation of the second ALJ. By implication its issuance of the subpoena to Texaco approving the ALJ's subpoena with modifications not relevant, may be taken as approving the approach of the Exxon ALJ.

This court is loath to reject an agency's interpretation or application of its rules unless plainly unreasonable or contrary to their clear meaning. Judicial intervention is even more inappropriate in view of the promulgation by the FTC of new rules for discovery in adjudicative proceedings. 43 Fed.Reg. 56862 (Dec. 4, 1978). These regulations explicitly state that discovery may not be denied on the ground that the evidence will be inadmissible at the hearing "if the information sought appears reasonably calculated to lead to the discovery of admissible evidence." Id. at 56864 (to be codified in 16 C.F.R. § 3.31(b) (1)).

Texaco also argues that the subpoenaed documents are not relevant to the Commission's investigation. Texaco further asserts that adjudicative subpoenas are subject to a more stringent standard of relevancy than investigative subpoenas and that the district court applied the wrong standard in reviewing the Texaco subpoena. We reject these arguments. The test for the relevancy of an administrative subpoena, whether adjudicative or investigative, is whether the information sought is "reasonably relevant" to the agency's inquiry. Compare United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950) (investigative subpoena) with FTC v. Browning, 140 U.S.App.D.C. 292, 298, 435 F.2d 96, 102 (1970) (adjudicative subpoena). ⁴ There is, of course, a difference in that the relevancy of an investigative subpoena is measured against the "general purposes of (the agency's) investigation," FTC v. Texaco, Inc., 180 U.S.App.D.C. 390, 402, 555 F.2d 862, 874 (en banc ), cert. denied, 431 U.S. 974, 97 S.Ct. 2940, 53 L.Ed.2d 1072 (1977), while the relevancy of an adjudicative subpoena is measured against the charges specified in the complaint. Moore Business Forms, Inc. v. FTC, 113 U.S.App.D.C. 231, 232, 307 F.2d 188, 189 (1962). But both instances are governed by the same standard, reasonable relevance.

In the case before us, the district judge applied the proper standard of review, 442 F.Supp. at 1126, and held that the request was both relevant and reasonable. "A finding by the district court that documents are relevant and necessary to an inquiry by the FTC is essentially factual in nature and cannot be overturned unless the district court's finding is clearly erroneous." FTC v. Lonning, 176 U.S.App.D.C. 200, 208 n. 14, 539 F.2d 202, 210 n. 14 (1976). We have reviewed the record in this case and find nothing therein which would lend any support to a determination that the district court erred in finding the information sought by the Texaco subpoena relevant to the Exxon inquiry.

IV. PROTECTIVE ORDER

The protective order governs the disclosure of the subpoenaed documents to persons outside the Exxon proceeding. Under its terms, the two types of documents, confidential and nonconfidential, ⁵ are accorded different treatment.

As to confidential documents, the protective order guarantees that the supplying party is to be provided ten days notice prior to...