Martin Marietta Corp. v. FTC

• Decision Date: 13 July 1979
• Docket Number: Civ. A. No. 79-0162.
• Citation: 475 F. Supp. 338
• Parties: MARTIN MARIETTA CORPORATION, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants.
• Court: U.S. District Court — District of Columbia

475 F. Supp. 338

MARTIN MARIETTA CORPORATION, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants.

Civ. A. No. 79-0162.

United States District Court, District of Columbia.

July 13, 1979.

Gerald M. Stern and H. Bartow Farr, III, Washington, D. C., for plaintiff.

Lillian A. McEwen, Asst. U. S. Atty., Washington, D. C., for defendant.

Kenneth R. Reed and Mark D. Freitag, Phoenix, Ariz., admitted pro hac vice, for defendant-intervenor.

MEMORANDUM

GASCH, District Judge.

Plaintiff Martin Marietta Corporation ("Martin Marietta") has brought suit to enjoin the Federal Trade Commission ("FTC" or "the Commission"), the individual Commissioners, and the Secretary of the Commission from releasing to the Attorney General of the State of Arizona the transcript of a deposition given by an officer of Martin Marietta during the Commission's investigation of the Portland cement industry. Martin Marietta maintains that the deposition contains trade secrets and confidential commercial and financial information that are exempt from disclosure under applicable statutes. The State of Arizona has intervened as a party defendant and the matter is presently before the Court on the parties' cross-motions for summary judgment. After considering the arguments of counsel, the Court concludes that the FTC acted within its statutory discretion in ordering release of the deposition and grants defendants' and defendant-intervenor's motions for summary judgment.

FACTUAL BACKGROUND

The FTC is a federal administrative agency created by the Federal Trade Commission Act ("the Act"), 15 U.S.C. §§ 41 et seq. (1976). It is authorized and directed by section 5 of the Act to prohibit unfair methods of competition and unfair or deceptive acts or practices.¹ To achieve this goal it is empowered to gather and compile information concerning, and to investigate, the organization, business, conduct, practices, and management of corporations in or affecting commerce, to make public such portions of the information obtained as it deems expedient in the public interest, and to make reports and recommendations for legislation to Congress.²

Under this statutory mandate, the FTC initiated a non-public investigation of the cement industry, for which use of compulsory process has been authorized. See In the Investigation of the Portland Cement Industry, File No. 77-10010. On May 8, 1978, the Commission issued a subpoena ad testificandum to Mr. Dale Mitchell, the President of Martin Marietta Cement, Western Division, to appear and testify at a deposition on May 31, 1978. On May 22, 1978, Martin Marietta moved to quash the subpoena because of its concern that the Commission subsequently might disclose transcripts, notes, or memoranda relating to the deposition to adverse parties.³ The Commission on May 23, 1978, denied Martin Marietta's motion to quash the subpoena, but advised the corporation that it "may apply for assurances of confidential treatment consistent with the language and purposes of the Freedom of Information Act for genuinely sensitive information actually revealed during the investigative hearing."⁴

On May 31, 1978, Mr. Mitchell's deposition was taken pursuant to the subpoena ad testificandum. The testimony he gave included information concerning plant locations, the types of cement sold by Martin Marietta, estimates of plant life, percentages of cement sold to various customers, storage capacity of plants, plant production, cement shipments, percentage of markets, freight absorption, and profitability computations.⁵

By letter dated August 21, 1978, Kenneth R. Reed, Chief Counsel of the Antitrust Section of the Office of the Arizona Attorney General, made a request for copies of the transcripts of any depositions taken during the Commission's cement industry rulemaking investigations. On October 4, 1978, Mr. Reed amended his request to exclude any customer names that might appear in the transcripts. Both requests specified that they were made under the Freedom of Information Act. The transcript of the deposition of Mr. Mitchell came within the scope of these requests.

The Arizona Attorney General sought this material for use in two antitrust suits: a federal suit in which Martin Marietta is named a codefendant, In Re Cement and Concrete Antitrust Litigation, No. Civ. 76-488A PHX CAM (D.Ariz.), and a state antitrust suit, Arizona ex rel. Babbitt v. Portland Cement Ass'n, No. 0339216. The federal suit is a class action under the Clayton and Sherman Acts involving twenty-five plaintiffs including the states of Arizona, Colorado, Oregon, and private litigants, all of whom are purchasers of cement. Mr. Reed represents the interests of all state and local governmental entities in Arizona that purchased cement from defendants and is also serving as plaintiffs' liaison counsel. The other action is brought in state court pursuant to the Uniform State Antitrust Act,⁶ which provides that the state attorney general may bring an action in the name of the state for injunctive relief and civil penalties for violation of state antitrust laws. Martin Marietta is not presently a defendant in the state action.

Following receipt of Mr. Reed's request, the FTC solicited Martin Marietta's comments on and objections to release of the transcript of Mr. Mitchell's deposition. In response, Martin Marietta made two submissions⁷ in which it alleged that the deposition was exempt from disclosure under 5 U.S.C. §§ 552(b)(4), (7) (1976). On November 13, 1978, the Acting General Counsel of the FTC informed Martin Marietta and the Arizona Attorney General of his decision to release the deposition. He further stated that actual release of the document would not be made for ten days. The decision to release was made pursuant to the discretionary authority of the Commission, conferred by section 6(f) of the Federal Trade Commission Act,⁸ and in furtherance of the Commission's policy, expressed in section 4.6 of its Rules of Practice, of cooperation with other government agencies in law enforcement efforts. No mention was made of the Freedom of Information Act as a basis for the release.

On November 20, 1978, attorneys for Martin Marietta met with Commission staff to object to the release of the transcript without excision of confidential information and trade secrets. The staff agreed to postpone release of the information until December 8, 1978, and requested a memorandum detailing Martin Marietta's objections. Martin Marietta complied on November 29, 1978 and argued that the Commission policy of cooperation with governmental entities did not cover the request by the Arizona Attorney General, who was acting in a private capacity as a purchaser of cement in the federal lawsuit. Martin Marietta also contended that the Commission was required to consider the FOIA and the various FOIA exemptions before releasing the transcript.

Subsequently, the Commission's Deputy General Counsel agreed to defer release of the depositions in order to provide the Arizona Attorney General with an opportunity to respond to Martin Marietta's arguments. The attorney general did so and Martin Marietta filed a reply. On January 10, 1979, the Commission notified Martin Marietta of its decision to release the transcript in five working days from the date of the letter.⁹ The Commission decided to grant discretionary release of the transcript on the ground that both the federal and state court actions "were brought pursuant to the authority conferred on the Attorney General of Arizona by the State of Arizona to conduct investigations and bring actions on the State's behalf for the enforcement of state or federal antitrust laws." The Commission therefore reasoned that the Attorney General was acting in the public interest regardless of whether his capacity be characterized as governmental or proprietary and concluded that application of Rule 4.6 was appropriate.¹⁰

The proposed release was conditioned on the following requirement of confidentiality: "The information is being released to you for purposes of the antitrust litigation currently being handled by your office and with the understanding that you will preserve its confidentiality, and in particular, that it will not be disclosed to any person other than employees of your office." The letter announcing release of the information also stated that if the requested materials became the subject of discovery requests in the litigation, all parties would have a "full opportunity to argue for confidential treatment, pursuant to a protective order entered in that litigation or otherwise, of any material whose disclosure might result in competitive injury."¹¹

On January 16, 1979 plaintiff filed this lawsuit, seeking a temporary restraining order and a preliminary injunction to prevent the Commission from releasing the transcript. Before the matter came on for a hearing, the parties stipulated that the transcript would not be released until a judgment on the merits of this lawsuit or October 1, 1979, whichever occurred first, and that plaintiff would withdraw its motions for a temporary restraining order and a preliminary injunction.¹²

MERITS

In its complaint Martin Marietta seeks a declaratory judgment that the Mitchell deposition is exempt from disclosure under the Freedom of Information Act ("FOIA") because it contains confidential business information and information specifically exempted from disclosure by statute. 5 U.S.C. § 552(b)(3), (4) (1976).¹³ Subsequent to oral argument of the cross-motions for summary judgment in this case, the Supreme Court issued its decision in Chrysler Corp. v. Brown, 441 U.S. 281, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979).¹⁴ In Chrysler the Supreme Court reaffirmed the principle that the basic objective of the FOIA is disclosure. 99 S.Ct. at 1712. By providing limited exemptions in the FOIA from disclosure, the Court concluded Congress was concerned with the agency's need for confidentiality. Id. at 1713. The...