Heublein, Inc. v. FTC, Civ. A. No. 77-2026.

• Decision Date: 27 June 1978
• Docket Number: Civ. A. No. 77-2026.
• Citation: 457 F. Supp. 52
• Parties: HEUBLEIN, INC., a corporation, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants.
• Court: U.S. District Court — District of Columbia

457 F. Supp. 52

HEUBLEIN, INC., a corporation, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants.

Civ. A. No. 77-2026.

United States District Court, District of Columbia.

June 27, 1978.

J. Wallace Adair, Ralph J. Savarese, John P. Wintrol, Raymond A. Jacobsen, Jr., Howrey & Simon, Washington, D. C., for plaintiff; George J. Caspar, Gen. Counsel, Heublein Corp., Farmington, Conn., of counsel.

Daniel J. Metcalf, Kay E. Kiner, F. T. C., Washington, D. C., John Oliver Birch, Asst. U. S. Atty., Civil Division, Washington, D. C., for defendants.

ORDER

FLANNERY, District Judge.

This matter comes before the court on cross-motions for summary judgment. The essential facts are not in dispute. It appears that plaintiff in the late 1960's attempted to effect a merger with United Vintners. This merger attracted the attention of the F.T.C. due to the possible adverse effects on competition in the wine and distilling industry. The F.T.C. conducted preliminary and formal investigations into this matter. These investigations culminated in the filing of an administrative complaint against plaintiff in 1972. After a period during which the parties attempted to settle the antitrust case, the F.T.C. issued an amended complaint on November 16, 1976. Discovery was completed in the administrative matter on March 28, 1977, and the administrative trial began in San Francisco on December 13, 1977. Although the F.T.C. possesses an extensive discovery procedure, plaintiff never requested the documents at issue during discovery. Rather, on July 29, 1977, plaintiff filed an F.O. I.A. request for all documents held by defendants in the National Distillers and Chemical Corp. file, an enforcement file closed on October 25, 1972. Also, on August 5, 1977, plaintiff requested all information in the open enforcement file against plaintiff and in the closed National Distillers file which had been prepared by Edna Knopp, the Commission economist. During the processing of these requests, and the subsequent administrative appeals, a majority of the documents responsive to the requests were released. See Index to Documents, p. 2 (70-75% of the documents found to be responsive were released.) It appears that a large number of the documents in the National Distillers file had been destroyed in the six years since that file was closed. See Affidavits of John D. Macoll (Defendant's Exhibit D) and Robert J. Gac (Defendant's Exhibit E). It does not appear that plaintiff doubts the thoroughness of defendant's documents search, but merely contests the validity of the grounds offered in support of the withholding of certain documents.

Defendants have indicated that the only documents found to be responsive to plaintiff's request were in the open Heublein file. Defendants have submitted an extensive indexing and justification statement for those documents withheld in whole or in part. The various documents have been subdivided into categories according to their content. It should be noted that Document 1 in Category G(2), for which exemption 6 is claimed, and all of the documents in Category J, for which exemption 4 is claimed, are no longer at issue, the plaintiff having conceded the validity of those withholdings. As to the remainder of the documents, defendant claims exemption 5 (intraagency memoranda), exemption 7(A) (investigatory files), or both.

I. Exemption 7(A).

5 U.S.C. § 552(b)(7) provides in pertinent part that the mandatory disclosure provisions of the Freedom of Information Act do not apply to:

investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings . . ..

In the present case, the file on Heublein, from which all of the responsive documents still in issue were taken, is currently open and the subject of an ongoing administrative trial in which the F.T.C. seeks enforcement of federal antitrust laws. It is clear that until March of 1977, plaintiff had the right to engage in discovery in anticipation of this administrative hearing under the supervision of the administrative law judge. It is also clear that plaintiff did not avail itself of this opportunity to get the documents now at issue. Defendants contend that because the documents at issue were in this open file, these documents, if disclosed, would severely inhibit the F.T.C.'s enforcement litigation. It appears that the key to the F.T.C.'s case in the enforcement action rests on an analysis of a market definition developed by Edna Knopp, the Commission economist. Most of the documents at issue reflect either information she collected or considerations she made in developing this market model. Also, some of the documents, specifically those developed in relation to the National Distillers case but located in the Heublein file, are said to so mirror the F.T.C.'s tactics in the present enforcement action that releasing them would be extremely prejudicial. Plaintiff argues that some of these documents were not generated specifically by the investigation, and, therefore, do not fall under exemption 7(A). Plaintiff also alleges that defendant's descriptions of these documents are self-serving and deceiving and that, therefore, this court should engage in an in camera inspection of the more than 900 pages of documents still remaining.

As for the request for in camera inspection, the Circuit Court in Weissman v. C. I. A., 184 U.S.App.D.C. 117, 565 F.2d 692 (1977) has stated that it would be a "staggering burden" to require a court to engage in an in camera inspection of documents in every case. Id. 184 U.S.App.D.C. at 122, at 697 n. 11. Rather,

It is only where the record is vague or the agency claims too sweeping or suggestive of bad faith that a District Court should conduct an in camera examination to look for segregable non-exempt matter.

Id. 184 U.S.App.D.C. at 123, 565 F.2d at 698. At oral argument, counsel for plaintiff raised questions as to the thoroughness of the F.T.C.'s efforts to disclose all reasonably segregable factual material. Despite the fact that the F.T.C. had already released a large amount of non-exempt factual material in this case, the court on May 8, 1978, ordered the F.T.C. to submit a small but representative number of designated documents for in camera inspection. In this way, the court was able to "spot check" the reliability of the F.T.C.'s document index and the F.T.C.'s efforts to segregate factual material. See Ash Grove Cement v. F. T. C., 167 U.S.App.D.C. 249, 511 F.2d 815 (1975). In this way, the court has avoided the burden of a full in camera review.

Upon examination of the documents requested, the court is satisfied that the F.T.C. has been diligent in its efforts to honestly describe the contents of the documents at issue. The documents matched closely the descriptions ascribed to them in the index. Further, the court found no reasonably segregable factual material to be disclosed. Although any economic analysis must, of course, rely on facts, the facts contained in...