FCC v. Schreiber

Decision Date04 May 1964
Docket NumberNo. 17990.,17990.
Citation329 F.2d 517
PartiesFEDERAL COMMUNICATIONS COMMISSION, Appellant-Cross-Appellee, v. Taft B. SCHREIBER and MCA, Inc., Appellees-Cross-Appellants.
CourtU.S. Court of Appeals — Ninth Circuit

Joseph D. Guilfoyle, Acting Asst. Atty. Gen., Sherman Cohn, Attorney, Department of Justice, Max D. Paglin, General Counsel, John J. O'Malley, Jr., Upton K. Guthery, and Barbara B. O'Malley, Attorneys, Federal Communications Commission, Washington, D. C., and Francis C. Whelan, U. S. Atty., Los Angeles, Cal., for appellant-cross-appellee.

Beilenson, Meyer, Rosenfeld & Susman, Allen E. Susman, and Jeffrey L. Nagin, Beverly Hills, Cal., for appellees-cross-appellants.

Before JERTBERG and BROWNING, Circuit Judges, and FOLEY, Jr., District Judge.

FOLEY, Jr., District Judge.

Appellant-Cross-Appellee will be referred to as the Commission and Appellees-Cross-Appellants jointly as Appellees and separately as MCA and Schreiber.

On February 26, 1959, by authority of 47 U.S.C. § 403, the Commission published in the Federal Register (FR 1605) its order that an investigatory proceeding be instituted

"* * * to determine the policies and practices pursued by the networks and others in the acquisition, ownership, production, distribution, selection, sale and licensing of programs for television exhibition, and the reasons and necessity in the public interest for said policies and practices * * *."1

In the order, the hearing examiner designated to conduct the investigatory proceedings was authorized to receive evidence and make a record thereof, to administer oaths, subpoena witnesses, to compel their attendance, and compel the production of documentary evidence.

The order closed with this paragraph:

"IT IS FURTHER ORDERED, That the said investigatory proceeding shall be a public proceeding except that the said presiding officer may order non-public sessions of the said investigatory proceeding where and to the extent that the public interest, the proper dispatch of the business of said proceeding, or the ends of justice will be served thereby."

The record reflects that while public sessions were being held in Los Angeles, California, the examiner issued a subpoena duces tecum to Schreiber, MCA's Vice President, commanding him to appear to testify and to produce documentary evidence described in the margin as Annex A and B.2

At the time and place appointed, Schreiber appeared with counsel and produced the list in Annex A, but refused to submit the material subpoenaed in Annex B, although then and there in his possession, unless the Commission would accept said material on a confidential basis, contending that if the material was revealed at a public hearing, trade secrets would be disclosed. Schreiber further refused to testify while the hearing was public and unless his counsel be given the right to object and to state grounds of objection on the record. The examiner refused to close the hearing and to accept the subpoenaed material as confidential and directed that Schreiber's counsel not participate in the proceedings other than by being present and advising Schreiber.

Appellees petitioned the full Commission for review. The examiner was affirmed on all points and Schreiber was ordered by the Commission to produce Annex B and to testify publicly regarding the same.3

When Schreiber maintained the same position, the Commission sought enforcement in the court below pursuant to 47 U.S.C. §§ 401(a), 401(b), 409(f), and 409(g).

The learned trial Judge filed an opinion January 22, 1962, F. C. C. v. Schreiber, D.C., 201 F.Supp. 421, and on March 2, 1962, filed his Findings of Fact, Conclusions of Law and Order.

The Conclusions of Law and Order are printed in the margin.4


We will first deal with the appeal by the Commission and will state the questions and errors specified in the language of the Commission set forth in its opening brief.

Questions Presented

1. Whether the District Court erred in finding and concluding that any further

interrogation of appellees and any documents produced by them shall be taken in a private, non-public proceeding and held by the Commission on a confidential basis; that the Commission must move the District Court for an order allowing the documents and testimony to be made public; and that appellees shall have the right to oppose such a motion.

2. Whether the District Court erred in concluding that under Section 6(a) of the Administrative Procedure Act, 5 U.S. C. § 1005(a), appellees have the following rights:

(a) The right to have their counsel object to any questioning by the Commission, its counsel, or the presiding officer deemed improper by appellees\' counsel.
(b) The right to have appellees\' counsel present, on the record, concise grounds and reasons for any such objection.
Specification of Errors

1. The District Court erred in its Finding of Fact XI.

2. The District Court erred in its Conclusion of Law VII(b) and VII(c).

We will consider these questions and specifications of error in the order set forth above.

First Question and Specification of Error

In his decision (pp. 425-426 of 201 F. Supp.), the Trial Judge stated:

"However, I am of the opinion that in view of the well-grounded fears of the respondents that the testimony to be given might result in disclosure of trade-secrets, of which competitors might take advantage, it is ordered that the Examiner confine attendance at the hearing to the persons directly involved in the proceedings, their counsel, experts and witnesses and exclude the general public."
"The respondents, MCA, Inc. and Taft B. Schreiber, are hereby ordered to appear before a Hearing Examiner duly appointed by the Commission at a time and place to be fixed by the Commission, to testify and to produce books, papers and documents in accordance with the above mentioned subpoena and orders issued by the Commission and duly served upon the respondents. Jurisdiction will be retained by the Court for any subsequent proceedings consequent upon the order. (Hunt Food & Industries, Inc. v. Federal Trade Commission, 9 Cir., 1960, 286 F.2d 803, 813)."

The Trial Court's Finding of Fact No. XI reads:

"The record herein, including but not limited to, the testimony in the extensive hearings held by the Commission in its network programming inquiry, make it necessary that in protection of respondents\' rights and to preclude disclosure of trade secrets of which competitors might take advantage, all further interrogation of, and all further testimony given by, respondents shall be given in non-public sessions, and shall be retained and maintained in confidence by the Commission."

The Commission does not question that the Trial Court had the authority to impose safeguards to prevent the possible disclosure of trade secrets, while ordering that appellees appear, testify and disclose the material sought by the Commission, but contends that the District Court abused its discretion and therefore erred.

In Chapman v. Maren Elwood College, 9th Cir., 1955, 225 F.2d 230, at Page 231, we stated:

"The key question in enforcement of the demand to produce records is whether it is reasonable or arbitrary. * * * The question of reasonableness is one for consideration and adjudication by the courts. The mere fact that a demand has been made by an administrative agency does not establish the demand as reasonable."

In Goldberg v. Truck Drivers Local Union No. 299, 6th Cir., 1961, 293 F.2d 807, at Page 814, the Court states:

"In our opinion, it was not unreasonable to compel production of records which the law required to be kept and from which the reports filed with the Secretary were made. * * * The District Court, however, had the power to impose protective restraints on the conduct of the investigation to relieve against oppression or other illegal conduct. Hunt Foods & Industries, Inc. v. Federal Trade Commission, 9 Cir., 286 F.2d 803, 811, certiorari denied 365 U.S. 877, 81 S.Ct. 1027, 6 L.Ed. 2d 190."

In F. C. C. v. Cohn, S.D.N.Y.1957, 154 F.Supp. 899, at Page 908, the Court held:

"Of course the subpoena power must at all times be confined to `the rudimentary principles of justice,\' and the courts will plainly refuse to enforce an administrative subpoena which is not within the bounds of reasonableness. Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652; Chapman v. Maren Elwood College, 9 Cir., 225 F.2d 230; N. L. R. B. v. Anchor Rome Mills, 5 Cir., 197 F.2d 447, 449-450. There is a delicate balance between the necessity of obtaining information required in the public interest in furtherance of a lawful inquiry, and the onerous burdens which the furnishing of this information may place on these respondents. But in the case at bar the scales are tipped on the side of the public interest so as to outweigh the burden and inconvenience to the respondents."

and at Page 911 of 154 F.Supp.,

"Subpoenas of an administrative agency, though validly issued, need not be enforced precisely according to their terms or without modification. Whenever it is made to appear that a subpoena is so broadly drawn as to be oppressive and unreasonable it is the duty of the court to prevent abuse of its process and to place such limitations upon the subpoena as is just and right under all the circumstances. N. L. R. B. v. Anchor Rome Mills, 5 Cir., supra, 197 F.2d, at page 449; see Kilgore National Bank v. Federal Petroleum Board, 5 Cir., 209 F.2d 557, 560; cf. Chapman v. Maren Elwood College, 9 Cir., 225 F.2d 230, supra; Walling v. American Rolbal Corp., 2 Cir., 135 F.2d 1003 at page 1005, supra. These matters are in the court\'s discretion."

In Delno v. Market St. Ry. Co., 9th Cir., 1942, 124 F.2d 965, at Page 967, this Court said:

"Discretion, in this sense, is abused when the judicial action is arbitrary, fanciful or unreasonable, which is another way of saying that discretion is abused only where no

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