FTC v. Crowther

• Decision Date: 25 June 1970
• Docket Number: No. 23924-23927.,23924-23927.
• Parties: FEDERAL TRADE COMMISSION v. Walter E. CROWTHER, Vice-President and Secretary, Louisville Cement Company, Appellant. FEDERAL TRADE COMMISSION v. William L. LUCAS, Secretary and Treasurer, Martin Marietta Corporation, Appellant. FEDERAL TRADE COMMISSION v. GENERAL PORTLAND CEMENT COMPANY, Appellant. FEDERAL TRADE COMMISSION v. Worth LOOMIS, Vice President-Administration and Secretary, Medusa Portland Cement Company, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

430 F.2d 510 (1970)

FEDERAL TRADE COMMISSION v. Walter E. CROWTHER, Vice-President and Secretary, Louisville Cement Company, Appellant.

FEDERAL TRADE COMMISSION v. William L. LUCAS, Secretary and Treasurer, Martin Marietta Corporation, Appellant.

FEDERAL TRADE COMMISSION v. GENERAL PORTLAND CEMENT COMPANY, Appellant.

FEDERAL TRADE COMMISSION v. Worth LOOMIS, Vice President-Administration and Secretary, Medusa Portland Cement Company, Appellant.

Nos. 23924-23927.

United States Court of Appeals, District of Columbia Circuit.

Argued April 17, 1970.

Decided June 25, 1970.

Mr. Terrence C. Sheehy, Washington, D. C., with whom Mr. Harold F. Baker, Washington, D. C., was on the brief, for appellants.

Mr. Leonard Schaitman, Attorney, Dept. of Justice, with whom Messrs. Thomas A. Flannery, U. S. Atty., and Morton Hollander, Attorney, Dept. of Justice, were on the brief, for appellee.

Before McGOWAN, TAMM and ROBINSON, Circuit Judges.

McGOWAN, Circuit Judge.

This appeal is from a judgment of the District Court granting enforcement, at the instance of the Federal Trade Commission, of certain subpoenas duces tecum issued in a proceeding initiated by the Commission to challenge, under Section 7 of the Clayton Act (15 U.S.C. § 18), the acquisition by Lehigh Portland Cement Company of a number of ready-mix concrete companies. Appellants are not parties to that proceeding. They are, rather, concrete producers who are actual or potential competitors of Lehigh, to whom, at Lehigh's request, the Commission directed the subpoenas in question calling for business information normally regarded as confidential. Their objection is not to any disclosure at all, but to the allegedly discriminatory manner in which disclosure is sought to be compelled. Because we think the Commission has failed to come to grips adequately with the claim of discriminatory treatment, we vacate the judgment of the District Court and remand the case to the Commission for further consideration.

I

The subpoenas in suit commanded appellants to appear at the complaint proceeding against Lehigh as witnesses and to produce certain records and information relating to their individual business operations. Motions to quash resulted in a stipulation between appellants and Lehigh, as well as some modifications in the scope of the subpoenas by the hearing examiner. What remained at issue was the request of appellants that certain information covered by the subpoenas¹ be presented to an independent accounting firm for organization and compilation in such a way that, although the information would be available in its entirety, it could not be attributed to any identifiable reporting company.

The examiner was of two minds about this request. He noted that what Lehigh "here is asking for is rather sensitive information from its own competitors, or potential competitors, who as such have been allegedly damaged by respondent's acquisitions of ready-mix concerns purchasing cement." He remarked the essential similarity of the situation to an earlier proceeding also involving a challenge by the Commission to the acquisition by a cement producer of ready-mix companies where the respondent had sought like information from competitors, and in which the Commission had provided for submission of the information in precisely the manner requested by appellants here. Matter of Mississippi River Fuel Corporation, F. T.C. Dkt. No. 8657. He stated his feeling to be that the Mississippi formula devised by the Commission, "however commendable an effort to insure confidentiality * * * within the bounds of the law," does "impair substantially the usefulness of the information to the party" requesting it.² He concluded, however, that the clarity of the Commission's command in Mississippi, with its emphatic rejection of any right in a respondent "to rummage at will through the confidential business files" of its actual or potential competitors, was such as to constrain him to grant appellant's request.

The Commission was not impressed with this deference to its decision of two years before. It characterized its action in Mississippi as having "merely held that under the facts of that proceeding the treatment ordered was appropriate." It did not indicate in what particulars it thought the facts before the examiner were different from those in Mississippi, but, on a wave of generalities about the need to strike a balance in each case between the interests of "the respondent's need to know sensitive information and the third party's need to protect the same valuable information from his competitors," it floated the case back to the examiner for reexamination.

Because the initial examiner was about to retire, a new examiner, by consent of the parties, undertook this task. There were no new submissions of either evidence or argument. The new examiner denied appellant's request for Mississippi treatment, and his reasons for doing so are confined to the following:

"* * * The undersigned examiner has carefully reviewed all of the documents above referred to and is of the opinion * * * that all of the information requested by the respondent be submitted without Mississippi River treatment. Counsel for respondent has made it abundantly clear that he will not disclose the information supplied.²"

Footnote 2 so inserted by the examiner in his opinion consists solely of the citations of Commission proceedings in 1961 and 1964 involving protective orders. Those proceedings are not referred to in the Commission's subsequent opinion or in its brief in this court. The documents described by the examiner as having been reviewed by him refer expressly only to the subpoenas, the motions to quash, the first examiner's rulings, the appeals from those rulings and the answers thereto, and the Commission's order of remand.³

The Commission approved this altered disposition of the matter. After describing the ordering provisions of that disposition, it characterized the new examiner as having "carefully considered our previous opinion," and as having "carefully attempted to consider the particular facts of this discovery dispute and * * * tailored a protective order which attempts to fully and fairly balance the potentially conflicting needs of respondent and the third parties."⁴ The Commission's only descent to the level of the concrete is a reference to the order as preventing "the alleged injuries which might flow from disclosure of the data to Lehigh or to the trade at large by restricting its availability to Lehigh's counsel alone."

The petition for enforcement in the District Court was heard on the papers and oral argument of counsel. The court's findings of fact are made up of a review of the proceedings at the Commission level, and its legal conclusions are that the matter was one reposing in the Commission's discretion, which was not abused. Its reference to Mississippi is restricted to the conclusion that it does not preclude the Commission from prescribing a differing treatment in another case, provided it is fair.

II

In this court it is argued at length on behalf of the Commission that stare decisis has traditionally been thought to be a principle of palpably less rigorous applicability in the field of administrative law than elsewhere, and that the Commission is not bound to decide all future cases in the same way as it has decided a like one in the past. These are surely unexceptionable propositions, of the truth of which this court in especial has no need of persuasion. Our consciousness of the admonition of the Supreme Court in FCC v. WOKO, 329 U.S. 223, 67 S.Ct. 213, 91 L.Ed. 204 (1946), that a regulatory agency is not "bound * * * to deal with all cases at all times as it dealt with some that seem comparable," has been demonstrated repeatedly.⁵

Neither are we, however, unmindful of our duty under the Administrative Procedure Act (5 U.S.C. § 706) to be alert to agency action which is "arbitrary" or "capricious," or to take note of those situations where, in the words of the Supreme Court, "the Commission has not adequately explained its departure from prior norms and has not sufficiently spelled out the legal basis of its decision." Secretary of Agriculture v. United States, 347 U.S. 645, 652-653, 74 S.Ct. 826, 831, 98 L.Ed. 1015 (1954). See Greensboro-High Point Airport Authority v. CAB, 97 U.S.App.D.C. 358, 231 F. 2d 517 (1956), and Herbert Harvey v. NLRB, 128 U.S.App.D.C. 162, 385 F.2d 684 (1967).

A judicial disposition to accord an administrative agency wide latitude in adjusting its regulatory policies from case to case does not dispense with the necessity of adequate explication of the reasons why such alteration or adaptation may be seen to be rational and to escape the domain of the seemingly arbitrary. Judicial review of agency action otherwise becomes meaningless and incapable of fulfilling the Congressional purposes in providing it. See Burlington Truck Lines v. United States, 371 U.S. 156, 167-168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962), and NLRB v. Metropolitan Life Ins. Co., 380 U.S. 438, 443, 85 S.Ct. 1061, 13 L.Ed.2d 951 (1965).

The question immediately before us is not whether the Commission could properly abandon the Mississippi formula so lately devised and utilized by it in a set of circumstances closely comparable to the one at hand, but whether the Commission has sufficiently identified and articulated its reasons for doing so. The facts have that degree of parallelism which entitles both appellants and ourselves to a fuller explanation from the Commission, and not from its counsel in this court, as to why the Mississippi approach should be jettisoned without giving credence to the charge that similar supplicants receive dissimilar dispensations. If the Commission thought it important in 1966 to design a method of purveying confidential business information which would elicit and expose the information in full but protect the competitive position of its source,...