ML19323A154
| ML19323A154 | |
| Person / Time | |
|---|---|
| Site: | South Texas, Comanche Peak  |
| Issue date: | 04/04/1980 |
| From: | Bouknight J, Green D BAKER & BOTTS, HOUSTON LIGHTING & POWER CO. |
| To: | NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP) |
| References | |
| NUDOCS 8004170312 | |
| Download: ML19323A154 (81) | |
Text
)
C UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING APPEAL BOARD
)
In the Matter of
)
)
HOUSTON LIGHTING & POWER COMPANY
)
Docket Nos. 50-498A et al.
)
50-499A
)
(South Texas Project, Units 1 and 2)
)
)
TEXAS UTILITIES GENERATING COMPANY
)
Docket Nos. 50-445A
)
50-446A (Comanche Peak Steam Electric
)
Station, Units 1 and 2)
)
)
MEMORANDUM OF HOUSTON LIGHTING & POWER COMPANY CONCERNING AUTHORITIES RELEVANT TO THE DISCOVERABILITY OF DOCUMENTS
' GENERATED IN CONNECTION WITH SETTLEMENT i
By Order of March 28, 1980, this Appeal Board re-quested the parties to furnish additional authority bearing on whether courts do or ought to recognize the existence of a privilege against discovery of I
documents generated in settlement negotiations.
Houston Lighting & Power Company respectfully submits this l
memorandum in' response.
t In this memorandum we make two basic points:
l
[
l 8004170 hk
(1) While the pertinent case law is not extensive and arises in diverse contexts, it does reflect this important common theme:
in recognition of the important public policy to encourage compromise, courts and tribunals will recognize a " privilege" against discovery of documents generated solely in connection with settlement negotiations unless the party seeking disclosure demonstrates extraordinary circumstances.
Mere " suspicion" of abuse is not enough.
(2) The existence of such a privilege is supported by the Federal Rules of Evidence and the policies underlying them.
I.
THE APPLICABLE CASE LAW REFLECTS THE PRINCIPLE THAT DOCUMENTS GENERATED SOLELY IN CONNECTION WITH SETTLEMENT NEGOTIATIONS SHOULD BE PROTECTED FROM DISCOVERY, AS A MATTER OF PUBLIC POLICY, ABSENT A DEMONSTRATION OF EVIDENCE OF EX-TRAORDINARY CIRCUMSTANCES BY THE PARTY SEEKING DISCOVERY In this section of this memorandum we discuss the per-tinent case law.
We discuss separately the pertinent feder-
. al agency decisions, and cases relied upon below by the mov-ants, and conclude by analyzing these authorities as a whole.
A.
Federal Court Decisions Most of the pertinent federal court decisions have arisen principally in two types of cases, actions brought b/
or dis-under Title VII of the Civil Rights Act of 1964 f
crimination in employment, and actions brought under the antitrust laws.
We turn to the antitrust decisions first.
Requests for discovery of settlement-related materials have been rejected on several occasions in federal antitrust cases.
For example, in City of Groton v. Connecticut Light
& Power Company, 84 FRD 420 (D. Conn. 1979), several among a group of plaintiffs decided to settle a case brought against an electric utility company.
The non-settling plaintiffs, claiming they had been excluded from the settlement negotia-tions, sought the terms of the settlemant agreement itself, asserting, apparently largely on the basis of suspicion, that disclosure could reveal additional anticompetitive activities by the defendants.
84 FRD at 423.
_/
42 USC S2000e,
The Court found this an insufficient basis to warrant disclosure.
It pointed out that discovery of the settlement dollar amounts would give the non-settling plaintiffs a " bargaining advantage" (since they would know the dollar amount given to others would be a " floor" at which they could begin their bargaining).
Thus, the effect of the decision in future cases would be to disincline plaintiffs from being the first among a group to settle.
The ultimate consequence of dis-closure would have been to inhibit compromise in subsequent cases.
84 FRD at 423.
Both Ayers v.
Pastime Amusement Co.,
240 F.Supp. 811, 812 (E.D.S.C. 1965) and Rohlfing v. Cat's Paw Rubber Co.,
20 F.R. Serv. 541 (N.D. Ill. 1954) presented similar situa-tions.
In Ayers, a non-settling defendant was not permitted to discovery materials generated in connection with settle-i ment negotiations between plaintiffs and other defendants which culminated in a covenant not to sue.
While the court expressed a particular concern for avoiding incursions into the files of an attorney, the policy reasons underlying its decisions apply with some force here.
In Rohlfing, too, where a defendant sought materials generated in connection with settlement dismissals negotiated by other parties, and sought them apparently because it suspected documents adverse to the plaintiff might thus be obtained, the court refused
- to order production of anything more than the settlement agreements themselves.2/
Under Title VII of the Civil Rights Act, the Equal i
Employment Opportunity Commission -(EEOC), in order to main-tain an action, must first be unable to obtain a satisfac-tory conciliation agreement.
It is a defense to Title VII actions brought by the EEOC to establish that the Commission did not engage in good faith efforts at conciliation.4/
In Haykel v.
G.F.L.
Furniture Leasing Co., 76 FRD 386, 392, i
('.D.Ga.
1976) defendant G.F.L.,
upon being sued by 395-96 N
the EEOC and a former employee, sought to obtain the concil-iation material in the EEOC's files.b!
G.F.L. contended that materials generated in connection with compromise were not privileged from discovery, and that it needed them to test and undermine the EEOC's assertion that it had been unable j
to obtain an agreeable settlement arrangement.
In short, Other antitrust decisions, while less directly apposite, have declined to order discovery of settlement-related I
materials in part owing to recognition of the public policy favoring settlement and the chilling effect of forced disclosure, e.
g.,
Duplan Corp. v. Deering Milliken, Inc., 540 F.2d 1215, 1218-19 (4th Cir. 1976)
(work of non-lawyers regarding settlement in prior liti-gation included, on policy grounds, under the " work-product" umbrella); United States v. Reader's Digest Association, Inc., 25 F.R. Serv.2d 1303 (D. Del. 1978)
(FTC employees not required to answer deposition ques-tions in civil penalty action concerning-their subjective thoughts in negotiating a consent decree).
I!
42 USC S2000e-5 (f) (1) ; e.g., EEOC v. Griffin Wheel Co.,
360 F.Supp. 424 (N. D. Ala. 1973).
5/
A copy of the decision is annexed as Exhibit A.
l
G.F.L. made arguments--lack of privilege and relevance to "justifi-cation"--similar to those propounded by the movants belcw.
i i
The EEOC countered, inter alia, that the documents were priv-ileged, by reason of the possible chilling effect disclosure would have upon efforts to compromise.
The court agreed:
Plaintiffs argue with some force the conciliation negotiations should not be subject to discovery since discovery of this material would destroy the openness and informality of the conciliation
[ citations omitted.}
Plaintiff's process. -..
e arguments in this respect are meritorious.
We can conceive of no purpose which would be served by allowing discovery concerning substantive as-i pects of conciliation-negotiations except permit-ting one party to improperly gain access to inter-office memoranda and other confidential information.
76 FRD at 392.
Not satisfied, G.F.L.
sought reconsideration, claiming I
that what it really desired was a narrow, in camera inspec-tion of only the documents relevant to its defense.
Even if it construed G.F.L.'s request so narrowly, the Court found, discovery would be " improper" in that it could have a chill-ing effect on settlement negotiations by other parties in the future.
76 FRD at 396.
Solicitude for the-possible chilling effect arising from i
discovery on the parties' reflections on settlement porposals was likewise the basis for the decision in EEOC v. E.
I. du Pont de Nemours & Co., 9 FEP Cases 6'S (W.D.Ky. 197415/
6/
A copy of the decision is annexed as Exhibit B.
1.
B.
Administrative Decir{ons in Other Agencies While the Board's Order expressly requested guidance on how "the courts" do or ought to consider the question at hand, Houston did not understand that order to suggest that the manner in which other federal agencies have dealt with this question would be unwelcome.
We are aware of two admin-istrative decisions on point.
Black Marlin Pipeline Co.,
Federal Energy Regulation Commission Docket No. CP-45-93 (Remand), Initial Decision dated Oct. 1, 1979 at 12-13 (Exhibit 8
C hereto);
Seeburg Corp., 20 Ad.L.2d 603, 616-17, 20 Ad.L.2d-618, 625 (FTC 1966). (Exhibit D hereto)
Black Marlin Pipeline involved a request for internal documents generated in connection with a settlement proposal by j
a pipeline company that was the target of a FERC investiga-tive proceeding.
It was held that where such documents were 3
not admissible under the Commission's regulations and the Federal Rules of Evidence, they should not be discoverable.
In Seeburg Corp., respondent moved to vacate an FTC complaint, on grounds, inter alia, that contrary to the i
Freedom of Information Act [FOIA] and due process of law, it had been improperly denied discovery of internal FTC
" memoranda commenting on its settlement proposals to the i
Commission."
The materials at issue thus were analogous to those at issue here.
The FTC found that such discovery was unwarranted.
The Commission noted that FOIA did not enlarge a private litigant's_ discovery rights in FTC litigation and went on to state that " documents of thi? natur'e.
. have hitherto never been considered as subject to discoveryfin this agency's
~
proceedings."
20 Ad.L.2d at 616.
Accord,-20 Ad.L.2d 618,f625.
l l
l C.
Recent Licensing Board Ruling Houston also calls to the Appeal Board's attention a recent ruling of the Licensing Board which is relevant i
l in the instant controversy.
Discovery revealed that Dr.
i Norman Lerner, expert economic witness for the Staff in this proceeding, has only once before performed an antitrust analysis in the electric utility industry.
This work was done on behalf of the Commission Staff in the Consumers Power Company (Midland) settlement proceeding. 1I Dr. Lerner there I
prepared documents analyzing the economic effect of various settlement proposals, documents parallel to those in question here.
(Lerner Deposition, July 19, 1979 at 13-14, 28).
Because that work offered Houston the only opportunity to discover the economic principles Dr. Lerner has applied in an antitrust analysis of this industry and to test whether he will depart from that prior application in this case, and in light of the Board's ruling here, Houston requested discovery.
j The Licensing Board, however, in an oral ruling on i
March 28, 1980, denied Houston's motion for production of Dr.
l Lerner's work.
While the Board has not articulated its i
precise rationale, it pointed out in the conference call that the Midland proceeding is not yet. settled, and that discovery l
of analyses of settlement proposals would be ' denied. 8/
2/
Consumers Power Company (Midland Plant, Units 1 and 2i)
NRC Docket Nos. 50-329A, 50-330A.
-&/
Houston does not seek review of that ruling here.
- However, o
we believe it'does suggest that the difficulties posed by
-the Order-under review are those which will arise in other contexts.
9.-
D.
Cases Relied Upon by Movants Below We are unaware of a single case in which documents of the type in question here, i.e. documents in the nature of studies of settlement proposals, have ever been ordered produced to adverse parties in the course of litigation.
None of the cases relied upon by the movants below ordered production of such documents.
See United States v.
Reserve Mining Co.,
412 F.Supo 705 (D.Minn. 1976), aff'd and remanded on other grounds, 54 3 F. 2d 1210 (8th Cir.
1976);
In re Special Nov. 1975 Grand Jury, 433 F.Supp.
1094 (N.D.Ill. 1977); Magnaleasing Inc. v. Stanton Island Mall, 76 FRD 559 (S. D.N.Y. 1977).
Reserve Mining involved a penalty proceeding subsequent to the litigation on the merits, wherein sanctions were sought for defendants' concealment of the numerous documents during that litigation.
There, the court held that Reserve's assertion of a compromise privilege was untimely and went on to state in dicta that it would have been unavailing even if timely, because the documents in questions were not genuinely prepared solely in connection with settlement proposals and i
because Reserve was attempting to conceal facts unrelated to settlement proposals.
In contrast, here the documents were generated solely in response to and as part of settlement pro-
-posals.
Reserve Mining simply is not apposite to the situation at hand.
l l
1 I,
In re Grand Jury involved a grand jury subpoena for personal records of transactions by two trust officers of i
a bank.
The case stands merely for the proposition that records as to transactions will not be withheld from the secret deliberations of grand juries.
E!
Magnaleasing, supra, involved an effort by a judgment creditor to obtain discovery under Rule 69(a) into demonstrably fraudulent transfers of assets to and from l
iefendants made under the veil of " settlement."
Even in
~
this context, discovery was strictly confined to portions of the settlement revealing specific transfers of assets.
The case bears no relation to the instant situation.
See also the analysis in City of Groton v. Connecticut Light & Power Co.,
supra, 84 FRD at 422-23.
j Each of the three cases relied on by movants below involved situations where there was no threat whatsoever t
that good faith compromise efforts would be chilled by disclosure.
One does not need to launder non-settlement documents as' in Reserve Mining, hide transactions from the grand jury as in
-9/
Indeed, Federal Rule of Evidence 408 is inapplicable in grand jury proceedings.
See Fed. R.
Evid.
1101 (d) (2).
In a footnote, the court alluded to the argument propounded by the trust officers, that under Reserve l
Mining, supra only documents created prior to the commencement of settlement negotiations need be produced.
The court found this argument " hazardous" and " unduly-technical," particularly when made in the context of a grand jury proceeding.
433 F.Supp at 1097 n.2.
To the extent the court meant that it is the relationship of the document in question to settlement that should control rather than the date of its composition, we would' tend to agree.
In re Grand Jury, or defraud creditors as in Magnaleasing, to settle a case.
Moreover, each involved blatant misconduct.
The instant situation is the opposite on all counts.
E.
Synthesis The above authorities arise in diverse contexts, and some plainly are more apposite than others.
But, fairly read, one common policy does appear in each of them -- an abiding concern that compromise be fostered and not fettered or chilled by unwarranted disclosure.
The result is general recognition of the following proposition:
documents pre-pared solely in connection with settlement negotiations should not be subject to discovery by adverse parties, absent
[
a strong demonstration of extraordinary circumstances, such as fraud.
S f
4 l
P l
l
o t
II THE EXISTENCE OF A SETTLEMENT PRIVILEGE IS SUPPORTED BY FEDERAL RULE OF EVIDENCE 408 Prior to the enactment of Rule 408, compromise negotiations were deemed inadmissible at trial under common law on the theory of irrelevance, i.e.,
that they merely reflected a desire for peace.
The Advisory Committee on the Rules of Evidence found this to be an artificial theory:
It preferred to base the rule on the public policy favoring the compromise and settle-ment of meritorious disputes; in other words, it opted for the privilege approach.
Advi-sory Committee Note to Court, Rule 408, 56 F.R.D.
183, 227-228 (1972).
Waltz and Huston, The Rules of Evidence in Settlement, 5 Litigation 11, 13 (Fall 1978); Compare C. McCormick, Law of Evidence SS 76,251 (1954).
Where material is privileged at trial, policy con-siderations render it non-discoverable as a general rule.
8 Wright and Miller, Federal Practice and Procedure S 2016 (1970); United States v. Reynolds, 345 U.S.
1 (1953).
The reason for this rule is that evidentiary privileges are ordinarily granted to encourage confiden-tial communications and the development of materials related thereto.
Permitting discovery of such communi-cations and related materiala innerently violates the privilege and moreover creates the risk that once dis-
closed such materials may be used to a party's detriment.
That the Supreme Court and the Congress explicitly carved out an evidentiary privilege regarding settlement negotiations serves to support the corollary proposition that settlement communications are to be protected from unwarranted disclosure via discovery. 11!
--11/
The third sentence of Rule 408, referring to evidence "otherwise discoverable" was added so that where a party at trial sought to introduce facts obtained from
" independent sources" his opponent could not prevent him from doing so simply-by presenting that fact during compromise negotiations.
Conference Report quoted in 10 Moore's Federal Practice S 408.01[8] (2d ed. 1979).
The Conference Committee clearly thought documents generated solely in connection with settlement negotiations were in a different category from
" independent sources."
d 0 CONCLUSION Based on the authorities discussed above, and the arguments advanced in petitioners' previous pleadings and oral argument, Houston respectfully asks the Appeal Board to reverse the Licensing Board's ruling of March 7, 1980, and order that documents generated solely in connection with settlement of this proceeding remain confidential.
Respectfully submitted,
).a. AuL:e 1,.
J. $. Bouknight, Jt.#
W o..
C. k / w Douglas'G. Green
/
Attorneys for Houston Lighting
& Power Company OF COUNSEL:
BAKER AND BOTTS 3000 One Shell Plaza Houston, Texas 77002 LOWENSTEIN, NEWMAN, REIS, AXELRAD & TOLL 1025 Connecticut Avenue, N. W.
Washington, D.
C.
20036 April 4, 1980
. CONCLUSION Based on the authorities discussed above, and the arguments advanced in petitioners' previous pleadings and oral argument, Houston respectfully asks the Appeal Board to reverse the Licensing Board's ruling of March 7, 1980, and order that documents generated solely in connection with settlement of this proceeding remain confidential.
Respectfully submitted, J.D. AuL :e 4.
J.fK. Bouknight, Jf.I W o.. C. W / e Douglas'G. Green
/
Attorneys for Houston Lighting
& Power Company OF COUNSEL:
BAKER AND BOTTS 3000 One Shell Plaza Houston, Texas 77002 LOWENSTEIN, NEWMAN, REIS, AXELRAD & TOLL 1025 Connecticut Avenue, N. W.
Washington, D. C.
20036 April 4, 1980
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3 386 76 FEDERAL RULES DECISIONS s.
ceiv none and plaintiff has done nothing to tunity Commi.sion brought separate ac-1 p
sy[k enlighten us.
tions, which were consolidated, for discrimi-pg f.
p[{
s Defendants Sonnenberg and Raychem nation in employment, pursuant to Title 1
f have filed affidavits which aver that Ray. Vil of Civil Rights'Act of 1964 and equal pr,,,
chem Corporation has paid certain legal pay provisions of Fair Labor Standants Act,
,j f,n,,,7, 7
charges for the defense of itself and its praying for injunctive relief, back pay and b
acn,,,
employee, Sonnenberg. The underlying ra-other equitable relief. The District Court, j
icg,,,,j tiorale for awarding attorney's fees in such Richard C. Freeman, J., held that: (1) plain-erstragq
- 'a a situation is punitive. Hall v. Cole,412 U.S.
tiffs' discovery motion for production of 7,
s h..re g
- the determination of the amount to be sted stores m vanous cities across country v,.% y 1,93 S.Ct.1943,36 led.2d 702 (1973), and certain personnel files at defendant's affili-6 th;st 4.,
A.
asanled is left to the sound discretion of would be granted; (2) however,in order to 1
app,.np9
, {;
the trial judge.
avoid any undue burden,it was appropriate rivd R.g.
f.
for defendar't to simply produce relevant ame c.4) g g.
i Wev.iew the awarding of attorney,s fees documents for inspection at respective
?
Lahur 8 E
as an extraordinary remedy justified only branch locations; (3) furthermore, defend-y amen s st ;g.
5 by the unique circumstances of this case. ant was entitled to protective order prohib-(
, c;,;;
It is ADJUDGED and ORDERED that iting EEOC from distributing material out-p the defendants, Raychem and Sonnenberg. side agency during pendency of litigation min a
n have judgment against the plaintiff, Mise-and to return all documents at close there-d * *' *'t.
gades, Douglas & Levy, etc., for attornty's of; (4) discovery concerning substantive as-fees in the amount of $1,680.00.
pects of conciliation negotiations would not j
- 3. Fednal y 7
,4 be allowed; (5) defendant's motion to va-j While l4,,.j j
act. ions tg
(,;-
cate prior order of consolidation would be g
Civil Right. A,3
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denied; (6) no harm or prejudice to plain-o
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tiffs could result from granting defendant's must comport,,
n motion for leave to file amended answer so l}
tions of re'4 f
h as to deny that district court had subject
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unilue burd,s, - i h
matter jurisdiction over action; (7) material Rights Act of g
(
5 issues of fact existed regarding defendant's
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ed 42 U.S C.A. g c
Marianna T. HA).KEL 5
allegedly discriminatory policies with re-
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- 4. Federal Ci,e g
v.
spect to black entry into management levels j
in order to ' '.
(.
G.F.L FURNITURE LEASING of its organization and proper geographical 3
a result of greg 7
COMPANY.
area to be used to compile work force com-f employment diss; i
parison statistics, precluding partial sum-3 pursuant to Tith tj.
$)
1964 and equalgf EQUAL EMPLOYMENT mary judgment in favor of defendant; (8) p
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OPPORTUNITY even if defendant's original request for dis-Standards Act,et I
i COMMISSION covery concerning conciliation negotiations tion for pra! ~
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were more narrowly construed, discovery files at defendasti i
G.P.L FURNITURE LEASING would still not be allowed and (9) in light of j
in various cities N
b COMPANY.
m re fully developed factual record, de-propriate for a
3 j
fendant's motion to reconsider that portion 4
relevant decomesu' I Civ. A. Nos. 75-276A, 75-1751A.
of order allowing plaintiff's discovery as to I
live branch locatiois ?
[
United States District Court, submanagement positions in defendant's af-l 1961,$$701 et sigh /
h N. D. Georgia, filiated stores would be granted.
j U.S.C.A. $$ 200Ge n h
Atlanta Division.
Order accordingly.
Labor Standards 2
h]
amended 29 US 6
Dec.16,1976.
Civ. Proc. rule 33(cl, {
d
- 1. Federal Civil Procedure *=*1591 g
- 5. Federal Cidl
- j; Individual emplogee of defendant's At-Discovery motion at litigation stage of I
Upon grant ofy lanta store and Equal Employment Oppor-employment discrimination action brought j
production of certayf i
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i HAYKEL v. G.F.L FURNITURE LEAS. CO.
387 cae as 7e F.a.o. sse as7s3
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pursuant to Title VII of Civil Rights Act of fend Ant's affiliated stores located in various j
~ $v dacrirni-19M and equal pay provisions of Fair Labor cities across country, at litigation stage of l
4 Title Standards Act, whereby plaintiffs sought erapoyment discrimination action brought
,1 gi gai production of certain personnel files at de-pursuant to Title VII of Civil Rights Act of
- Act, fendant's affiliated stores in various cities 19M and equal pay provisions of Fair Labor L
M pay and across country, would be granted, there be-Standards Act, defendant was entitled to L
l we, ing some evidence that salary records were protective order prohibiting plaintiff, Equal
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g ay,;n.
centrally held by defendant's Atlanta store, Employment Opportunity Commission, i
1
% or where alleged discriminatory activity in-from distributing material outside agency j
wai nfr.1;.
volving individual plaintiff took place, and during pendency of litigation and requiring i
q.
that Atlanta facility was responsible for it to return all documents and copies there-
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M vb to appointing managers of outlying stores. of at close of litigation. Civil Rights Act of l
j %t, Civil Rights Act of 19M, 6 701 et seq. as 19M, l 701 et seq. as amended 42 U.S.C.A.
f.% %ng amended 42 U.S.C.A. 5 2000e et seq.; Fair i 2000e et seq.; Fair Labor Standards Act is
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Labor Standards Act of 1938, i Ed) as of 1938, i 6(d) as amended 29 U.S.C.A.
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- a. d.
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amended 29 U.S.C.A. 5 206(d).
l204d).
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- 2. Civil Rights =31
- 6. Civil Rights #32(2)
[%W n
- 2'-
,, Equal Employment Opportunity Com-FM CivH Procedure #839 mission may expand scope of an act,on be-E yond parameters of original charge.
To extent that, as result of discovery i
sm
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o permitted m employment discrimmation ac-8
- 3. Federal Civil Procedure =1572 l
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tion brought pursuant to Title VII of Civil
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While liberal discovery is encouraged in Rights Act of 19M and equal pay provisions
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..a 9 actions brought pursuant to Title Vil of cf Fair Labor Standards Act, plaintiff j
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Civil Rights Act of 19M, material sought Equal Employment Opportunity Commis-t' must comport with traditional discovery no-sion desired to broaden scope of litigation,it A..
N tions of relevancy and must not impose would be incumbent upon it to first concili-
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undue burden upon responding party. Civil ate additional claims r.nd to thereafter seek
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Rights A:t of 19M,6 701 et seq. as amend-leave of court to amend complaint sub judi.
j V
ed 42 U.S.C.A. $ 2000e et seq.
cc. Civil Rights Act of 19M, l 701 et seq.
I 9
C
- 4. Federal Civil Procedure =1634 as amended 42 U.S.C.A. ( 2000e et seq.;
i 1
In order to avoid any undue burden as Fair Labor Standards Act of 1938, l 6(d) as
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a result of grant, at litigation stage of amended 29 U.S.C.A. 6 206(4).
3
.f g i
employment discrimination action brought
- 7. Federal Civil Procedure =1591 j
4 pursuant to Title VII of Civil Rights Act of N
M 19M and equal pay provisions of Fair Labor Escomy c neuning substantive as-M'N Standards Act, of plaintiffs' discovery mo-E**l8 I'""'
ation negotiations wof net s.
i be allowed.
tion for production of certain personnel m employment discrimination f
files at defendant's affiliated stores located action brought pursuant to Title VII of N
b in various cities across country, it was ap-Civil Rights Act of 19M and equal pay fog propriate for defendant to simply produce pr visi ns f Fair Labor Standards Act.
h*
relevant documents for inspection at respec-Civi' ,ghts Act of 194, l 701 et seq. as N
tive branch locations. Civil Rights Act of amended 42 U.S.C.A. 6 2000e et seq.: Fair S
b.;
19M, $5 701 et seq.,709(s) as amended 42 Labor Standards Act of 1938, l Ed) as
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4 U.S.C.A. $$ 2000e et seq.,2000e-8(a); Fair amended 29 U.S.C.A. 5 204d).
l)
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Labor Standards Act of 1938, 6 6(d) as
- 8. Federal Civil Procedure =8 f
I amended 29 U.S.C.A. $ 204d); Fed. Rules District court would not reconsider its l'
Civ. Proc. rule 33(c),28 U.S.C.A.
prior determination ordering consolidation i
- 5. Federal Civil Procedure =1623 of employment discrimination actions com-
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k",
1 Upon grant of discovery motion for menced by individual employee and by production of certain personnel files at de-Equal Employment Opportunity Commis-
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388 76 FEDERAL RULES DECISIONS
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sion against same employer, as requested by ll 1 et seq., 6(d) as amended 29 U.S.C.A.
.h defendant which contended that its former ll 201 et seq.,206(d).
1 counsel failed to oppose plaintiff's motion
- 12. Civil Hights *=9.10
'i Appmph M ma evant to hir.
- 4 hh for consolidation in belief that settlement was imminent and that common questions ing practices of employer charged with em-
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of law; and fact emixxlied in actions were ployment discrimination ought to be that Weg insufficient to support prior determmation from which work force reasonably should
^ VN of con.<olidation. Civil Rights Act of 194 be drawn, and one substantial consideration N
I
$ 701 et seq. as amended 42 U.S.C.A.
under such a reasonableness test is area
.s q~
i 6 2000e et seq.; Fair Labor Standants Act from which employer's present work force d
of 19:N, 6 Gd) as amended 29 U.S.C.A.
is actually drawn. Civil Rights Act of 1964' l 204d); Fed. Rules Civ. Proc. rule 42(a),28 701 et seq. as amended 42 U.S.C.A.
y p,
U.S.C. A *
$ 2000e et seq.; Fair Labor Standards Act
- 9. Federal fisil Procedure #851 of 1938, $$ 1 et seq.,6(d) as amended 29
".'i Voicing oppmition to a motion to U.S.C.A. $$ 201 et seq.,200(d).
gg.,,
f amend is an impropr mode through whiti.
- 13. Federal Civil Procedure *=2557
$$ A.
E<
to raise objections as to legal adequacy of Determination, in employment discrim-tt I i
contents of putative amendment.
ination action, as to reasonableness" of i
- 10. Federal Civil Procedure o=838 area from which work force is drawn gener.
.g No harm or prejudice to plain' tiffs ally shouhl not be made on a motion for m%
could result from granting defendant's mo.
summary judgment, particularly where case m.
.p tion for leave to file amended answer so as is "lar'ge" and entry of summary judgment
- r o.g, p
to deny that district court had subject mat. is only partial. Fed. Rules Civ. Proc. rule 56, ter jurisdiction over employment discrimi. 28 U.S.C.A.; Civil Rights Act of IW, j 701 M'.
.e f,
nation action brought pursuant to Title VII et seq. as amended 42 U.S.C.A. $ 2000e et
, 7. e f
b'}, li of Civil Rights Act of IW and equal pay seq.; Fair Labor Standards Act of 1938,
" ' e4 provisions of Fair Labor Standards Act, $$ 1 et seq., 6(d) as amended 29 U.S.C.A.
+ ; a n' 4
since district court couhl raise question of $$ 201 et seq.,206(d).
%e, i
.g subject matter jurisdiction sua sponte at
- 14. Federal Civil Procedure *=2557 i
E any point in proceedings. Civil Rights Act In employment discriminatior action I
b' of IW, 6 701 et seq. as amended 42 U.S.
brought pursuant to Title VII of Civil O
C.A. 6 2000e et seq.; Fair Labor StandrJs Rights Act of 1964 and equal pay prosisions h
Act of 1938,6 6(d) as amended 29 U.S.C.A.
of Fair Labor Standards Act, material is-y ;53
$ 20G(d).
sues of fact existed as to defendant employ-
- 3 er's allegedly discriminatory policies with
?
t On Defendant's.tlotion for Partial respect to black entry into management I
hm' 7
Summary Judgment levels of defendant's organization and prop-l 4Ah
') '
- 11. Federal Civil Procedure *=2557 er geographical area to be used to compile K"1. bog z
On defendant's motion for partial sum. work force comparison statistics, precluding G' I" %
i N.a:M Iq q:
mary judgment in employment discrimina. Partial summary judgment in favor of de-l tion action brought pursuant to Title Vil of fendant. Civil Rights Act of 1968, j 701 et Leta. Gs. W i
8tacb KW(
j l
Civil Rights Act of IW and equal pay seq. as amended 42 U.S.C.A. l 2000e et provisions of Fair Labor Standards Act, dis. seq.; Fair Labor Standards Act of 1938, f
& Recseet.d trict court had to view facts in light most $$ 1 et seq.,6(d) as amended 29 U.S.C.A.
I in Os 1 E, l favorable to party opposing motion and $$ 201 et seq.,206(d).
p.wr j,
deny motion if a material issue of fact R,, bin %
Ff remained. Fed. Rules Civ.Prue. rule 56,28 On Motion to Reconsider c, w
~
seq. as amended 42 U.S.C.A. $ 2000e et Even if defendant's request in employ.
Regwns! Att, jl U.S.C.A.; Civil Rights Act of IW,6 701 et
- 15. Federal Civil Procedure *=1593 Acting W'j seq.; Fair Labor Standards Act of 1938, ment discrimination action for discovery of Atty, F. F. G h
Ib
4 HAYhEL v. G.F.L FURNITURE LEAS. CO.
389 Che as 76 F.R.D.ses Us76) 23 U.S.C.A.
materials conecrning conciliation negotia-tion Center, Atlanta, Ga., for plaintiff in i
t' tions were narrowly construed as a request Civ. A. No. 75-1751 A.
for an in camera inspection of all docu-in relevant to hir-ments of plaintiff Equal Employment O -
P ORDER s charged with em-portunity Commission relevant to question anght to be that of whether EEOC had complied with its RICHARD C.
FREEMAN, District conciliation termination procedures, dis-Judge.
asesonably should jal consideration covery would not be allowed, where infor.
This is an action for discrimination in test is area mation sought was already within knowl-employment brought pursuant to Title VH edge of both parties and, with execption of of the Civil Rights Act of 19M,42 U.S.C.
t(ork legal consequences, appeared to be undis-6 2000e and the Equal Pay provisions of the 42 U S C '
puted. Civil Rights Act of 19M,6 701 et Fair Labor Standards Act, 29 U.S.C.
MJ!g y g.A seq. as amended 42 U.S.C.A. $ 2000e et i 206(d). Plaintiffs pray for injunctive re-9g gg seq.; Fair Labor Standards Act of 1938, lief, back pay, and other equitabic relief
)
ll 1 et seq., 6(d) as amended 29 U.S.C.A.
due to defendant's alleged unlawful em.
$$ 201 et seq.,206(d).
ployment practices. The action is presently W7
- 16. Federal Civil Procedure *=1271 before this court on: (1) plaintiffs' motion N
In lig' t of more fully developed factual to compel production of certain documents; h
I Q
record subsequently before district court in (2) defendant's motion for a protective or-ia employment discrimination action, defend-der; (3) defendant s motion to compel pro-l'
[" **'
ant's motion to reconsider thst portion of duct, ion of certam documents; (4) defend-ges prior order allowing plaintiffs discovery as ant s motion to vacate the order of consoh.
eyNy, i, ".'
to submanagement positions in defendant's dauon; and (5) dehndanes netwn {or i
ilm g[7 affiliated stores, which order was based in leave to file an amended answer. The m-l is, part on plaintiffs
- representation that they stant motions wdl be con:,idered seriat,m.
i m.htorg9[*
l were not given an opportunity to examine At this juncture, a brief review of the sal,-
(
.4 Lwg 2
applications of persons hired and not hired ent facts is appropriate.
1 l
by defendant, a representation which was, Plaintiff Haykel, the original charging Q
l at very least, a good faith error, would be party, alleges that she was denied promo-4[b
)
granted. Civil Rights Act of 19M t 701 et tion into a senior sales position or into a N
{
seq. as amended 42 U.S.C.A. I 2000e et management training program when males n
i seq.; Fair Labor Standards Act of 1938, with less seniority and experience were so
$$ 1 et seq., 6(d) as amended 29 U.S.C.A.
promoted. Plaintiff allegedly discussed her e
Q '? '
$$ 201 et sc 7.,206(d).
situation with defendant's management g *D several times, but received no satisfactory explanation of the defendant's failure to Margie Pitts llames and Mary Ann Oak.
et ley, Atlanta, Ga., Earl Hariier, Jr., Gerald S.
prnmote her to a higher position. Finally, on July 14,1972, plaintiff filed a charge of G
Q*84 l
Kiel, Beverly G. Agee, E. E. O. C., Atlanta.
Ca., for plaintiff in Civ. A. No. 75 276A. discrimination with the Equal Employment Opportunity Commission (hereinafter the I
h$
l
)
Neal H. Ray!, Heyman & Sizemore, At-
"E.E.O.C.").
Thereafter, on July 19, 1972.
M i%y lanta, Ga., R. Lawrence Ashe,Jr., Donald R.
plaintiff was terminated purportedly be.
f
- ,y Stacy, Kilpatrick, Cody, Rogers, McClatchey cause of a personality clash between plain-1
- y. f G
& Regenstein, Atlanta, Ga., for defendant tiff and a male employee. Plaintiff fol-3 e
l T
p in Civ. A. Nos, 75-276A and 75-1751A. Iowed the appropriate administrative chan-N h
Abner W. Sibal, Gen. Counsel, William L.
nels and finally filed suit in this court on g
' ' ~
f Robinson, Associate Gen. Counsel E. E. O.
February 14, 1975.
j C., Washington, D. C., Earl Harper, Jr.,
Plaintiff E.E.O.C., which had investigat-w l
Acting Regional Atty., Gerald S. Kiel, Asst. ed and conciliated plaintiff Haykel's claim, i
4 Regional Atty., Beverly G. Agee, Trial brought an independent action in this court l
I Atty., E. E. O. C., Atlanta Regional Litiga-against defendant G.F.L. Furniture Leasing g
I I
y*
. J.
a
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v-
R*ff:Et* WEE S X5*4NIO6iEIMMIT W Jdi % ss.~.<,,awJ_g;-
gf
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76 FEDERAL RULES DECISIONS
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N Co. [ hereinafter G.F.L"] on February 14, the " branch" managers at the Atlanta facil.
1975. Plaintiff E.E.O.C. alleged inter alia' ity, discriminatory conduct at the branch j
that G.F.L. had engaged in discrimination facilities is attributable to personnel deci-
)
7*3**t on the bas:s of race and sex with respect to sions made at its home office in Atlanta.
.]
8%qu its hiring and promotional policies.
Defendant in turn argues that the E.E.O.
3 NN
'N On October 6,1975, the E.E.O.C. moved C.'s investigation only concerned the Atlan-3 4
to consolidate its action and plaintiff Hayk-ta facility and that plaintiffs now seek to J
M el's individual action. Defer.idant's counsel extend the scope of this action improperly
-?
S obtained several extensiona of time within after the time for such expansion has
}
,,. h
[
which to respond to plaintiff's motion, but passed. Moreover, defendant sigorously y
.4
/ l never in fact filed such a response. De-contends 8 that each of defendant's stores fendar;t now conte, that his failure to make their own hiring and firing decisions
,I 14 l respond was due * *' hat he believed to be without formal or informal advice from the y
i the imminent settlement of this action. In Atlanta store. Therefore, on the authority g
any event, on March 10, 1976, this court of Joslyn Dry Goods v. Equal Employment p.y ordered plaintiff fla>kel's action and the Opportunity Commission,483 F.2d 178 (10th S,
,, '[.,
k.,
~
E.E.O.C. action to be consolidated.
Cir.1973), defendant argues that limitation of discovery to the Atlanta facility is appro-PLAINTIFFS' MOTION TO priate.
w COMPEL PRODUCTION sw V
[1] Plaintiffs move this court to require
[2] At the outset,it is important to note
.p, p
i defendant to produce certain documents that plaintiffs' requested discovery present-
- j b;
w pertaining to applications and/or personnel ed some rather unusual circumstances. It
,,4 4
- lI files of employees, applicants and ex-em-is well settled in this circuit that the E.E.
.W
,,n m ployees employed by defendant in subman-0.C. may expand the scope of an action
,,y -
agement positans at defendant's affiliated beyond the parameters of the original m
3J stores in Nashville, Chicago, Corpus Christi, charge. Sanchez v. Standard Brands, Inc.,
,j
,d,wy and Houston. Plaintiffs contend that the 431 F.2d 455 (5th Cir.1970)(scope of judi-q' scope of this suit should include submanage-cial complaint is limited to scope of Equal e
k j
ment positions at the non-Atlanta facilities. Employment Opportunity Commission in.
.,)
k}
i s.
Moreover, plaintiffs aver that their initial vestigation which can reasonably be expect.
2 ar, u;..
discovery efforts have revealed that de-ed to grow out of a charge of discrimina-das y'
.wa J
fendant's allegedly discriminatory conduct tion). However, the instant action presents in its personnel selection in Atlanta has had the question of whether information may 9
anast es u
i b
certain prenumbral effects in submanage-be discovered at the litigation stage con.
9 ttassa$l
{
f ment as well as management level jobs in cerning purportedly independently operated tf er egi q
,d defendant's non-Atlanta facilities. Finally, facilities belonging to the defendant when
'j p
'Y
{I plaintiffs argue that since defendant selects no clear mentions has been made of those O
da%
,N
- 1. In pertinent part the E.E.O C/s complamt
- 2. Defendant supports these contentions with i
w; stated that: "[de.Tadant's) unlawful practices the affidavit of Mr. Millard Coghlan. President
,f Q,'
.g
({
include but are not hmited to the following:
of G F.L g
g f
(b) Fathng to promote because of sex;
- 3. He enginal charge only mentioned the At-
- 988').,,
h,"
(a) Fashng to hire because of race; 4
i e
b (c) Failms to hire because of sex; tanta facihty, in addition, the onginal E.E.O.C.
+
d (d) Dischargmg females because of their sex; complaint in pertinent part stated that the com-gunsa h
p (e) Faihng to train because of race and sex; pany "has intentionally engaged m unlawful 3
1 (f) Maintaining race and sex segregated job employment practices at its Atlanta facihty.
g; i;l classification {s];
However, in its prayer for rehef. the E E.O.C.
i
.g.p g,'
f (g) Faihng and refusing to take appropriate requested that the court order the company to ji affirmative action to ehmmate its disenmi.
refrain from given activity. Therefore, the g
M natcry employment pohcies and practices question of whether the E.E.O.C. intended to go.
j, and to correct the effects of past disenmi.
proceed against the company as a whole or nation against blashs and females.
only against the Atlanta facihty remams some-p.6
' 'l I
what unclear.
' 6.
5
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Q s
l 3
l h
1 e
e.'
Y
l
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HAYKEL v. G.F.L. FURNITURE LEAS. CO.
391 Cate as 76 F.R.D. 386 (Is78) facilities at the investigation, conciliation, relevant. Foster v. Boise Cascade, Inc.,10 t
or pleading stages of the administrative /ju-F.E.P.1287 (S.D. Tex.1974)(discovery as to g
dicial process.
nationwide corporate structure of defend-l'
'.m
[3] While it is clear that the Fifth Cir. ant was proper because evidence of discrim-cuit Court of Appeals has encouraged liber. ination would justify the granting of an e
- g al discovery in Title Vil actions, see, e. g.,
injunction to cover the breadth of geo-Georgia Power Co. v. E. E. O. C.,412 F.2d graphically proved discrimination and be-p h,9 402 (5th Cir.1969); Burns v. Thiokol Chcm-cause there was evidence of transfer of l'
Ja ical Corp.,483 F.2d 300 (5th Cir.1973), it is managerial personnel between defendant's
%, w equally clear that the material sought must plants); Brennan v. J. Af. Fields, Inc., 488 r.
, ;ph comport with the traditional discovery no-F.2d 443 (5th Cir.1973).
- Sw, tions of relevancy and must not impose an
. ytt.e4 undue burden upon the responding party.
[4-6] ' In addition, we believe that the f
See G. Cooper, II. Rabb, and IL Rubin, Fair burdensomeness question bears brief consid-
%a.
Employment Litigation (1975).
eration. Since pertinent portions of de-I
,e M '*
In a case very similar to this one, the fendant's records are not kept in one loca-i e*
Tenth Circuit Court of Appeals held on tion, production of the documents which
[
relevance ' grounds that the E.E.O.C. was plaintiffs request may be somewhat bur-
[
^*
not entitled to discover certain information densome even though the total number of 3
about six other stores in defendant's chain people employed by defendant only num-b when the charging party allegedly had been bers seventy. In order to avoid any undue i.
discriminated against by the seventh store burden, it is appropriate for defendant to
{
~,
3 g
kg and the plaintiff could not refute defend. simply produce the relevant documents for S
ant's affidavit stating that there were no inspection at the respective branch loca.
f t
J
,h,9 central personnel files or chain-wide hiring tions. See Rule 33(c), Fed.R.Civ.P.; 42 y
policies common to all the stores. Joslin U.S.C. 6 2000e-8(a).4 Furthermore, the de-4 3,
N gg Dry Goods Co. v. E;ual Employment Op. fendant is entitled to a protective order portunity Commission, 483 F.2d 178 (10th prohibiting the E.E.O.C. from distributing
.N 4
,..e.
Cir.1973). While we do not disagree with material outside the agency during the
4, the reasoning in the Joslin decision, there pendency of this litigation and requiring are certain distinguishable facts herein the E.E.O.C. to return all documents and IN which make Joslin inapposite. In the in. copies of documents discovered under this Ye stant action there is some evidence that order at the close of the instant litigation.
s v.
ytfeie '
- w salary records are centrally held by the Chrysler Corp. v. Schlesinger, 412 F.Supp.
Atlanta facility and that the Atlanta facili-171 (D.C. Del.1976). Finally, to the extent j,/{
r i
ty is responsible for appointing managers of that as a result of such discovery the E.E.
i
[b the outlying stores. Notwithstanding Pres-0.C. should desire to broaden the scope of
..T-.,
ident Coghlan's somewhat conclusory affi-the instant litigation, it would be incumbent N.,
davit, these factors tend to suggest infor-upon the E.E.O.C. to first conciliate addi-
'4..
mal involvement if not " policy making" by tional claims and, thereafter, seek leave of y
the Atlanta office. At a minimum, the court to amend the complaint sub judice.
See generally, S ual Employment Opportu-
- N E.E.O.C. should te entith d to conduct dis-t covery so as to be ir a position to controvert nity Commission v. Federated 31utucI In-surance
- Company, C.A.No.75-1925A defendant's "no central policy making" alle-gation. Accordingly, we conclude that the (N.D.Ga. Sept. 29, 1976, O'Kelley, J.). Ac-
,y-dxuments which the E.E.O.C. requests are cording!y, with the reservations herein-1 4
I
)
kka 4
4.
In pertanent part. thu section provides that; and the nght to copy any evidence of any W
In connection with any ir.vestigation of a person being investigated or proceeded
?
charge fded under section 2000e-5 of this against that relates to unlawful employment g
?
I.%
title, the Commission or its designated repre.
practices covered by this subchapter and is i
sentatne shall at all reasonable times have relevant to the charge under investigation.
l access to. for the purposes of exammation.
3 i
b.
p
(
es Lh ll :sm *
- n x Mngg)y y
m1m w w
. %$a.T% W L vN m
- ;g
-. y?
j@-
e;s
)
392 76 FEDERAL RULES DECISIONS
.p-c.
e above expressed, we hereby GRANT plain-the court held inter alla that the Commis-9 tiffs' motion to compel the production of sion was obligated to give the employer
%.P
.k l i
documents and GRANT defendant's motion "one last chance" to conciliate before break-
..Q 4 P(( jl for a protective order.
ing off negotiations. The instant plaintiffs
%4 N.'.
do not seem to contest the correctness of t
%",* y*
@5 l
DEFENDANT'S MOTION TO COMPEL that proposition. See 29 C.F.R. 61601.23.
i Ql l
PRODUCTION OF CERTAIN Moreover, defendant seems to have suffi-
)
.D*
DOCUMENTS cient information to establish the alleged l
.I. k ciliation material in the E.E.O.C. file. De- ~ violation by the Commission of this rule
[7] Defendant seeks to discover all con-l without discovering additional naterial.
M..
'r fendant supports its motion by arguing: (1) However, the availability of discovery must bl 3
that the material in question is not privi-not turn upon this court's evaluation of the
' W q
l leged in evidentiary terms; and (2) that strength of the parties' positior.s upon the
,% 1 1 i defendant does not seek judicial review con-merits. Rather, we believe that plaintiffs'
'f** **
E h
l i
cerning the conciliation negotiations but arguments give us ample reason to deny the j
g rather seeks information concerning the instant motion.
i Commission's alleged failure to comply with Plaintiffs argue with some force that
(
its own regulations. See 29 C.F.R. 61601.-
conciliation negotiations should not be sub-l m
- 23. The plaintiffs argue mter alia: (1) that ject to discovery since discovery of this ma-l the %
disecvery must be confined to whether the terial would destroy the openness and infor-
- 1. aim r. : '
F Commission attempted conciliation and mality of the conciliation process and chill to o,% -
)
whether it was unable to obtain an agree-the interest of future litigants in undertak-corda %
?
ment acceptable to it; (2) that conciliation ing good faith conciliation negotiations. E Fnt Itc, p '),
I t
f
,j efforts are privileged and madmissible as E O. C. v. DuPont Co.,9 F.E.P. 297 (W.D.
= = =v se evidence; and (3) that the Commission s s
nata" that E
Ky.1974); E E O. C. v. Griffin Wheel determination that it cannot procure a con-Company, 360 P.Supp. 424 (N.D.Ala.1973).
i undtr Rie '
t e
3 ciliation agreement is not subject to j,udicial ant's modens ;
Plaintiff's arguments in this respect are i
dation is -
p r
meritorious. Defendant's requests for all I-
- f. '
1 The defendant cites two cases as being information concerning conciliation negotia-central to the proposition that conciliation tions in effect inquires into the substance of DEFENDA 4 ' ;
y}
material is discoverable; however, H. Kes-those negotiations, thereby raising the pos.
TO Fl!.E g.i sier and Company v. Equal Employment sibility of producing chilling effects in sub-t (9.10]Defd
))
allow deft Opportunity Commission,472 F.2d 1147 (5th sequent conciliation efforts. We can con-q Cir.1973) is clearly inapposite. In Kessler ceive of no purpose which would be served I
to deny that-the Court of Appeals held that factual in-by allowing discovery concerning substan-jurisdiction oWh i
}q formation concerning the merits of a tive aspects of conciliation negotiations ex.
tiffs in tun argW charge was disclosable to the parties prior cept permitting one party to improperly sought to be adc;
.g to the commencement of litigation for the gain access to inter-office mer.oranda and well setthi M purpose of allowmg the parties to fully other confidential information. Moreover.
motion to amd '
assess the merits of the,r relative positions even if defendant posited a request for ma-through which't.G i
,I in light of all the evidence which had been terials dealing purely with the procedural legal adequacy alb j
compiled. The policy reasoning behind this aspects of conciliation negotiations, (i. e.
tive amendment. k holding has little application to the instant compliance.,ith applicable statutes of limi-and A. Miner, di situation in which after the election to com-tations) it would seem that discovery would dure, $ 1484 at C" I
g mence litigation has already been made, one accomplish little since defendarits would to amend is free!r 5
party seeks to discover all availabF materi-have almost as much access to this informa-Foman v. David!
{l al concerning conciliation negotiations, tion as would plaintiffs. Therefore, while The second case on which defendant we cannot say that any discovery reauest I'["suP C -
p,
places considerable weight is likewise inap-which defendants might make concerning Atlanta Standard.'
{
posite. In E E O. f. v. Raymond Metal conciliation negotiation material would be (SMSA) which u Products Co.,530 F.2d 590 (4th Cir.1970), denied a fortiori, we must conclude that the.
compiled by the c-e J
Yu
O r
HAYKEL v. G.F.L. FURNITURE LEAS. CO.
393
~
7 Cae as 76 F.R.D.ss4 (I976)
E instant request is overbroad and unsup-9 L.Ed.2d 222 (1962). Certainly, no harm or ported by relevant case authority. Accord-prejudice to the plaintiffs could result from ingly, for the reasons hereinabove ex-granting the amendment since this court
. [
pressed, defendant's motion to compel pro-may raise the question of subject matter duction of all material concerning concilia-jurisdiction sua sponte at any point in the tion negotiations is hereby DENIED.
proceeding. In light of the foregoing, de-g, fendant's motion to amend its answer is o
~
DEFENDANT'S MOTION TO VACATE hereby GRANTED.
{
g W
THE ORDER OF CONSOLIDATION In sum, this court has today: (1) i*
[8] Defendant requests this court to va-GRANTED plaintiffs' motion to compel W
?**
cate the order of consolidation entered on Production of certai t documents at their t
March 9,1976, for two reasons. First, de-Present situs; (2) GRANTED defendant's D'*
fendant contends that its former counsel motion for a protective order; (3) DENIED l
failed to oppose plaintiff E.E.O.C.'s motion defendant's motion to compel production of
~
for consolidation after procuring four ex.
certain documents; (4) DENIED defend-2
."4*
tensions of time in which to answer, be-ant's motion to vacate the order of consoli-h 's cause counsel felt that a settlement was dation; and (5) GRANTED defendant's mo-b imminent. Second, defendant argues that tion for leave to file an amended answer.
the common questions of law and fact em-IT IS SO ORDERED.
t at bodied in these two actions are insufficient l
M to support this court's determination that ORDER l
consolidation was proper. See Rule 42(a),
This is an action based on discrimination
/#
Fed.R.Civ.P. After careful consideration, in employment brought pursuant to Title we see no reason to reconsider our determi-VII of the Civil Rights Act of 1961, 42 nation that consolidation was warranted U.S.C. $ 2000e and the Equal Pay provisions under Rule 42(a), and, accordingly, defend-of the Fair Labor Standards Act,29 U.S.C.
' [?*
ant's motion to vacate the order of consoli-6206(d). Plaintiffs pray for injunctive re-dation is hereby DENIED.
lief, back pay, and other equitable relief
.M due to defendant *r allegedly unlawful em-h DEFENDANT'S MOTION FOR LEAVE ployment practices. The action is presently
.M TO FILE AN AMENDED ANSWER before this court on (1) defendant's motion h*
[9,10] Defendant moves this court to for partial summary judgment with respect allow defendant to amend its answer so es to hiring and (2) defendant's motion to ra-
^
to deny that this court has subject matter consider this court's order of December 16, U N**
jurisdiction over the instant action. Plain-1976. These motions will be considered se-
,O tiffs in turn argue the merits of the defense riatim.
6 sought to be added by amendment. It is well settled that voicing opposition to a DEFENDANT'S MOTION FOR PARTIAL 6
SUMMARY
JUDGMENT
?""
A motion to amend is an improper mcde 4
through which to raise objections as to the
[11-14] The gravamen of defendant's Q
legal adequacy of the contents of the puta-argument is that it is entitled to partial tive amendment. See generally, C. Wright summary judgment on the racial discrimi-y and A. Miller, Federal Practice and Proce-nation in hiring charge since the percentage dure, 1484 at 420 (1971). Moreover, leave of blacks in the defendant's work force
- pea to amend is freely granted in federal court. exceeds the percentage of blacks ir the p=.,
Poman v. Davis,371 U.S.178,83 S.Ct. 227, labor force in the suirounding areat Ac-h V.
- l. In support of this argument defendant show that while blacks e., prised about 21.7%
presents census information pertaining to the of the relevant population in 1970 and 21.1% of i
4: b Atlanta Standard Metropohtan Statistical Area the relevant population in 1975,23A% of the
- Qj
' (SMSA) which it comp' ares with hinng dita persons hired by defendant were black.
i con piled by the company. Defendant 3 figures 7.'.
1 o-D..,
M MNT@EDMUE@D8MrEMW@bhiM
.n.w
[
4 I
f 0
391 76 FEDERAL RUI.ES DECISIONS i-M y
cordingly, defendant asserts that systematic from a position and another black is hired p?.
discrimination against blacks does not exist to that position, there is no increase in black j
as a matter of law. Robinson v, Union employment within the firm even though
' i Carbide Corp.,538 F.2d 652 (5th Cir.1976). hiring statistics would suggest that the or-Plaintiffs respond with a three-fold argo-ganization had retained an additional black ment. First, plaintiffs contend that once employee. In these circumstances "per-4 black employee turnover is taken into centage statistics, standing alone, [would]
p [
account, the statistics reveal that very few f.ii to convey the full picture." Jones v.
black employees were left on the payrd at Tri-County Electric Cooperative, Inc., 512 I
any gisen point in time. Second, piaintiffs F.2d 1 at 2 (5th Cir.1975). If defendant's y
8 with
(
contend that since blacks were hired into facility were in fact a revolving door I '
menial hourly positions, there was discrimi-respect to black employees, then the dis.
-] '
or training ka%g nation in hiring with respect to entry level.4 crimination in promotion higher in the organization. Third, plain. charges might be inadequate to deal with
'[*63 4-
?.
tiffs argue that the hiring aree relevant to the probiem since black employees might
+
the instant action is the Atlanta-Fulton not be in the organization long enough to 3,
be under serious consideration for training l
W g
County arca.
P or promotion. Nevertheless, it would ap-t e;
Plaintiffs' former argument..tially ap-pear that Robinson might preclude denial of i
1 mi
,.i i pears to have some merit. Defendant, how-the instant motion for summary judgment ever, contends that Robinson v. Umon Car-on the basis of the forgoing argument.
6, i
bide Corp., supra, demands that this a'rgu.
While there are certain features which dis-8 k-
}
ment be rejected. In Robinson, the Court tinguish Robinson from the instant action
- N f5 l of Appeals examined the hiring statistics we believe on balance that Robinson repre-which were scrutinized by the district court sents the sense of the law in this circuit.
i j
and concluded that since the percentage of Therefore, we must conclude that plaintiffs' (M
blacks hired by the company exceeded the former argument against entry of partial f
percentage of blacks in the relevant work summary judgment is unpersuasive. Ac-
'*" W "N
4 l
force, the district court was warranted in cordingly, we must examine plaintiffs' oth.
E I concluding that Union Carbide did not en" er conten'. ions.
Y gage in discriminatory hiring practices.
Plaintiffs'second argument is that since
R}
j Union Carbide s promotional practices, how- %
gg
- g 5
I, ever, were considered to embody a distinct tions in defendant's organization, there was category of potential discrimmation upon discrimination in hiring with respect to the "PP".Pd*
4 Prwr 6en4 which the appellate court reached a con-higher entry levels into the organization.
trary result.
Defendant again argues that the question i,
- N *"*
w rk f m,.
t lt might be argued that the category of presented by this motion is discriminatie Cegac discrimination denoted discrimination in in " hiring" and that Robinson concludes E*P* N I
" hiring" is only meaningful if we view the that question. In this instance, we are un-o
- '# l '
I act of hiring as suggesting an intention to able to agree with defendant's contention 5
Opportu 7
{
retain a person in a given position for some since Robinson fails to address the thrust of 1
finite period of time. If a black is fired plaintiff's contention that defendant is dis-
- 4. For.%
e
~ hen was Y
t
{
- 2. Plaintiffs contend that while defendants hir-fact proven. In the instant action, we must entry inte mt 3
)
ing statistics suggest that their organization is view the facts in the light most favorable to the to promotest.
j 23 4% black, turnovers transform those statis-party opposing the motion (plaintiffs) and deny tion with ievd i
{
tics, with the result that only 4 of the 22 Atlan-the instant motion if a material issue of fact organuaused t
ta employees (18%) are in fact black.
remains. See Rule 56. Fed.R.Civ.P. Construed c
e l
In the latter sense, we are not certain that
- 3. For esampir.
3.
Perhaps the most basic distinction between Robinson creates an irrebuttable presumption were il vatan.M l
s j.
,{
Robinson and the instant a,ction is found in the of no discrimination upon a proffer by defend-vacancies m ueN l,
g scope of review applied to the two actions.
ants of statistics such as those preser'ed in the tween 1969 pd were filled t Robinson came to the Court of Appeals after a instant action. See generally, Ochoa v. Afon*
t l
trial on the merits btlow Therefore, t; e appel.
santo Company,335 F.Supp. 53 (S.D. Tex.1971).
late court was examiliTng what plaintiffs had in 3*-
r.
.K!
q c
EgBREBESEEE 3
p'-
HAYKEL v. G.F.L. FURNITURE LEAS. CO.
395 Cite as 78 F.R.D.384 (Is76) r
~ ',
criminating with respect to entry into the Remedies, at 235(1975). One substantial organization at different levels * (e. g. at consideration under such a reasonableness management as opposed to line levels).s test would, of course, be the area from D "'
While we believe that plaintiffs have suc-which defendant's present work force is S
f' +"
ceeded in raising a material issue of fact actually drawn. In any event, a determina-with respect to discrimination in hiring at tion as to " reasonableness" generally should
"{
the higher levels in defendant's organiza-not be made on a motion for summary g
9 tion, we need not rest our decision upon judgment, see generally,10 C. Wright and g,a that ground alone.
A. Stiller, Federal Practice and Prowdure, 6
,!i~.nc-Plaintiffs' third argument is that the la.
$ 2729 (1971) (summary judgment rarely OW*
bor force relevant to defendant's hiring granted in negligence action), particularly b1 practices is the Fulton County-City of At.
where the case is "large" and the entry of
.I N lanta area, see Parham v. Southwestern summary judgment is only partial. See n # **
Bell Telephone Co., 433 F.2d 421 (8th Cir. generally,10 C. Wright and A. 51 iller, Fed-h*
1970); see also, Chance v. Board of Examin. eral Practice and Procedure, b 2732 (1971).
ers,330 F.Supp. 203 (S.D.N.Y.1971)(general In sum, we believe that material issues of population comparisons rejected where jobs fact remain at least with respect to: (1) in question-school supervisory positions-defendant's allegedly discriminatory policies were relatively sophisticated) rather than with respect to black entry into manage-the wider Atlanta afetropolitan area which ment levels of defendant's organization; w
defendant posits. See Taylor v. Safeway and (2) the proper geographical area which l
g 4.u Stores, Inc., 365 F.Supp. 468 (D.Colo.1973) should be used to compile work force com-j f*y.,
(Standard 5fetropolitan Statistical area parison statistics. Accordingly, for the rea-4 A
used). According to plaintiff's statistics, sons hereinabove expressed, defendant's blacks represent 36.52% of the civilian labor motion for partial st.mmary judgment with Y ws force in Fulton County and 47.90% of the resp (et to defendant's allegedly discrimina.
tw civilian labor force in Atlanta proper. tory hiring practices is hereby DENIED.
g Therefore, plaintiffs argue that defendant's i
?.
hiring statistics in fact demonstrate that
!I b%
blacks are underrepresented in defendant's 510 TION TO RECONSIDER i
sm organization
- Defendant also moves this court to recon-y It is extremely difficult to determine the sider its order of December 16,1976, insofar
' s, appropriate labor pool area on purely an a as it ordered (1) that defendant's motion to M.[]
priori basis.8 Rather, "the appropriate compel production of "all conciliation mate-
.py.
work area ought to be that from which the rial" in the EEOC files be denied; and (2)
}
.g work force reasonably should be drawn."
that plaintiff's motion to comiel production i
W]e
~.1%,
G. Cooper H. Rabb, and H. Rubin, Fair of reconis concerning submanagement imi-g
' 'f %
Employment Litigation, at M (1975). See tions at defendant's affiliated locations be 4@'
also J. de J. Pemberton, Equal Employment granted. These rulings will be addrened f.s Opportunity-Responsibilities, Rights & seriatim.
I D e,;g 4.
For mstance even if m Robinson's terms
- 6. The debate as to the geographical area which
- g there was no disenmination with respect to is relevant for statistical comparison purposes N
entry into the firm in general, or with respect is a recurnng one As one author notes: *-[ilt to promotion, there still might be distnmma.
is usually to the advantage of a defendant m an tion with respect to black entry into the higher urban area to prefer Standard Metropohtan 3%-
orgamzational levels.
Statistical ares (SMSA) data over city popula.
tion figures because predommantly white sub-h*-s*
5.
For example, plaintiffs argue that while there urbs reduce SMSA mmonty group percentages.
w were il vacancies for manager-trainees and 17 On the other hand, an employer located in a 3
vacancies m sales and secretanal positions be.
suburban area will usually prefer localized tween 19tm and 1976, all of those positions data, rather than that for SMSA." G. Cooper.
-y g
2,-
. were filled by whites.
II. Rabb and 11. Rubm. fair Employment Liti.
{
p.?.,,
gation. at 64 (1975).
l.
M, t
(
. mm 1
w, W % 2?b % & ~ M E E= ~ 2 % 2 P
- M M.a- - i k e -
, j L. mny gy
- .as -
z.
l
, l 39(}
76 FEDERAL RULES DECISIONS
.ci.
(15] In the first instance, defendant plaintiffs' representation that they had "not ff now argues that what it reaFv re<iuested been given [an] opportunity to examine the g
g I 8
i I wa., a narrow in camera insi*ction of all applications of persons hired and not hired (l
hum documents relevant to the ouestion by defendant." It now appears that this p
,of whether plamtiff EEOC hmia {act representation was, at the very least, a prnierly ome.a wa a recilintinn ter-good faith error, since plaintiffs have en-D' !
P. I mination procedures., See 29 C.F.R. l 1601.-
tered into certain stipulations with opposing 4,
9 M ct acq. nuwcwr, even if we construe counsel which have yielded a good deal of E-Ei defendant's original request this narrowly, information concerning defendant's affili-we conclude that it may not be granted. ates. In addition, plaintiffs' own brief re-Is
' il The only legally operative information rele-veals that they have previously been afford-vant to the termination of conciliation issue ed access to certain data concerning sub-1.$
would be agency rules and procedures and management positions at affiliated stores.'
$I the timing and content of the termination Also, defendant has now agreed to answer
(
"i I b
iI of conciliation letters that were issued.
56 interrogatories which were previously Th,s informat, ion is already with,n the 4-i i
objected to and which bear on the question knowledge of both parties and, with the of defendant's employment practices at its N
exception of the legal consequences which Wi d
j by 4 attach thereto, appears to be undisputed. plaintiff EEOC's complaint suggests on bal.
g !'
Moreover, to the extent that defendant's ance that it intended to lodge the instant
.f:,
request might seek any information which acti n against defendant's Atlanta facility.'
pI f ~might touch on the substance of conciliation
} l' in light of the more fully developed factual negotiations,it is improper. As we noted in g
record now before this court, we believe
- i.
r our previous order," discovery of this mate-that defend.:nt's motion to reconsider is A
i;,
)
rial would destroy the openness and infor.
well founded. Accordingly, defendant's j'
mality of the conciliation process and chill the interest of future litigants in undertak, motion to reconsider is hereby GRANTED
.g gi ing good faith conciliation negotiations." as to the portion of this court's order grant-y
-EEOC v. Avon Pmfucts, Inc., C.A. No.75 ing plaintiff's motion to compel the produc-3
.3.,
1721A, (N.D.Ga. Jan. 14,1977) (Henderson, tion of documents concerning submanage-y
[
6 C. J.); EEOC v. Dupont Co., 9 F.E.P. 297 ment positions at defendant's affiliated (W.D.Ky.,1974); EEOC v. Griffin Wheel stores.
f W,
3.-f i
Company, 360 F.Supp. 424 (N.D.Ala.1973).
In sum, this court has today: (1) DE-
'k M
Accordingly, for the reasons hereinabove NIED defendant's motion for partial sum-N.
) 'i expressed, defendant's motion to reconsider mary judgment; (2) DENIED defendant's d
YY
%[
this court's order denying defendant's mo-motion to reconsider this court's order of
~ 'n f
P tion to compel production of certain concil-December 16, 1976, denying defendant's E
.i '
b iation materials in the EEOC's files is here-motion to compel production of certain doc-3 Y
by DENIED.
uments concerning conciliation negotiations g'
[16] Defendant also requests that this presently in plaintiff EEOC's files; and (3) d court reconsider the portion of our order GRANTED defendant's motion to reconsid-
{
w
.j i allowing plaintiffs discovery as to subman-er this court's order granting plaintiffs' mo-ww
, lf,,
agement positions in defendant's affiliated tion to compel production of certain docu-gm
?}Q stores. In part, our decision was based on ments relative to defendant's employment 2Ame gf) f;
- 7. At page 2 of Plaintiffs' Memorandum in Op-
- 8. The operative portion of plaintiff EEOC's
{
MM
%v%,i position to Defendant's Motion for Reconsider-complaint appears to be paragraph 7 wherein it M.' j
?
ation of the Court's Order of December 17, is stated that "Since July 2,1965, and continu.
l*A48N 1976. "plamtiff advises this cours that its previ-ously up until the present time, the company l
res4EL j
ous review of apphcatmns of persons not lured has intentionally engaged in unlawful employ.
{
gg g
at submanagement positions in affihated stores ment practices at its Atlanta facihty, in viola-n',y L,
was solely for the purposes of settlement and tion of Section 703 of Title Vll of the Civil g.j j k
a #2
.,p '
l j
not in order to pregare the case for tnal."
Rights Act of 1964.
ik I
S 3'
.n.
e a
',4 1
i D
l d>o I
Vs
. h.'t0 5 $t w L 1 n.
. g i - t or = M_A fd w't W * -hAc'.'%t 5$ $ W s"A 5' W W 3
i.
g
,p
[
KAUFMAN v. LAWRENCE 397
(
U Che as 7s F.R.D. 3s7 (Is77) h practices at submanagement levels in de-tion was superior to series of individual t
fendant's affiliated stores.
suits.
g g
Order accordingly.
[
.a k;A j
-s
- 1. Federal Civil Procedure =187 a
h h
h?N Injunction e 22 l
g.s Although, following denial of motion 9
hm for preliminary injunction, stock exchange
{
h offer was consummated, case was not moot
' des so as to prevent granting of alternative 4
g.g Albert KAUFMAN, Plaintiff-mandatory injunctive relief, where there
)
.. 'w' v.
had been no trial on merits; thus issues b
~
Mary Wells LAWRENCE. Charles Moss, raised in complaints retained their vitality
[
Richard T. O'Reilly, John V. Burns, and motion for class action determination h
f bO Frank G. Colnar, Frederick L Jacobs, was viable. Fed. Rules Civ. Proc. rule 23(a),
f Barry E. Loughrane, Martin Stern, Stan- (a)(1), (b)(3),28 U.S.C.A.
j j
i l
g **
ley G. Dragoti, Warren J. Kratsky, Ar-
- 2. Federal Civil Procedure =163 j
nold M. Grant. Troy V, Post, Emilio Puc-Numerosity test for class action was
[
ci, Catharine Gibson, E. Donald Challi' met, where putative class consisted of ap-t l
and Wells, Rich, Greene, Inc., Defend. proximately 2,000 members who were dis-ants.
l, 4 10 %
persed throughout United States, making i
I
~.5,
No. 74 Civ. 5081 (RLC).
joinder impractical. Fed. Rules Civ. Proc.
(*}' (*
^'
United States District Court, l l S. D. New York.
- 3. Federal Civil Procedure o=>187 g
.. Common questions of law and fact req-i f
June 23,1977.
i uisite for class action under federal rule
(
at;,,,,
were met by allegations that schemes and k,
k.
Common stock owner, who had ten.
devices had been utilized by defendants to
'4y dered shares pursuant to corporation's ex.
lefraud public stockholders of corporation j
change offer, brought action on behalf of and that defendants had made false and E' kr%.
himself and all other holders of stock, ex.
misleading statemer.ts or withheld material D.g,
ocpt those who were directors or officers of facts from public stockholders in making i
% c,,
corgoration, and sought right to prosecute exchange offer and soliciting acceptance by action as class action. The District Court, s.ockholders,'so that a factual and Icgat Robert L. Carter, J., held that: (1) al.
nexus linking all members of the putatise
- 7 M/% e, though, following denial of motion for pre. class was formed. Fed. Rules Civ. Proc rule b.%,,
liminary injunction, stock tender offer was 23(a)(2),28 U.S.C.A.
4 h.,
consummated, case was not moot and mo-
- 4. Federal Civil Procedure c=165 l
/ ano, tion for class action determination was via-Claims asserted met test of typicality
{
ble, and (2) class action was proper, where for class action purposes, where case in-
,4, putative class consisted of approximately volved general course of conduct by defend.
I y
2.000 members dispersed throughout the ants affecting all members of putative I
- g..
United States, common questions of law class. Fed. Rules Civ. Proc. rule 23(a)(3),28 q
and fact existed, test rif typicality was met, U.S.C.A.
7%
putative class was fairly and adequately
- l i
L M%
represented by plaintiff and class counsel,
- 5. Federal Civil Procedure e= 187
-l l
(,},.
common questions of law and fact predomi-Putative class was fairly and adequate-
<N., _
nated over any questions affecting individu-ly represented by p!aintiff and class counsel l
i J 4-al members of putative class, and class ac-for nurposes of rhaintaining class action.
jg.
- e j
l l
(tr e
e
-o h
EXHIBIT B s
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ML h.*
M I
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~
Q Uws &
Ar'
(.f \\ i, L ? l n $';, # lp {\\;.N
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't 9 'i j
h :.% } f31i W f./ :f,O y l
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K@g 9 g, Q.,4_l l
A+; ;p[im ' A O.4 G:}G:$-
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i zy
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l 3.y.l,~td j; 7.y ;y g,y,g s
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t i
EEOC v. du PONT CO.
9 FEP Cues G3
(
i n
- L I
EEOC v. du PONT CO.
MM ab!c to rule on the motion before the deposition date.
/l U.S. District Court, l
kll Western District of lientucky I SOURCI: OF CONTROVElt%V)
EQUAL EMPLOYMENT OPPORTU-gNo$fta le isb I
ye in.
tr NITY COMMISSION v. E. I du PONT and 9 of the complaint where it is al-13 l't de NEMOURS AND COMPANY. INC.
leged
i-I k'
l and NEOPRENE CRAFTSMJN 1
CIVIL IIIGIITS ACT OF 1968 were filed with the Commission alleging y1 I
UNION. No. 7874-D. November 1.1974
- 8. More than thirty (30) days prior to
- l
. i the institutton of this action, charres i )'- '9
.. [
that the Ccmpany and Union bact en-
-Discovery against EEOC-Deposi-ga;:ed in un: awful employmc-nt practices J;. j
.r tion-Conciliation procceilino > 108.
under Title VII.
H l 's *> > 108.710; 9.The Commission, after investicatin,
Employer and union being sued [1 t $YhndanYs int e vr.hc[tn ta a f
'i fi I under Title VII by EEOC are not en-emp!oyment practices. has been unable, i
4 titled to order compelline EEOC throuch info: mal methods of tonference,
!i 0!lic.al, whose deposillon is bemg concHLitten and persuasion. to !>ccure a taken, to answer questions recardmc conciliation acreement neceptable ta it."
MI it 1
These allegations are jurisdictional l
m
-gi -
atIltmative action proaram that was g
discussed during concihation negot:a. pre-requisites.
f,
a tiens. Information sought deals di-The Conunission designated Charles v*
..s ; t% W p icctly with things said and donc dur-A. Dixon. Director of the Commis-I! 4
'q p yb U i me concillation proceedings, and f1) sion's Memphis onice, to test:fy for
!t l ( # 't iaF 4*
FEOC's conciliation efforts are not re-the Conumssion at the a f oremen-
'i. 3d 14.N a 1.W i
viewab!c by court: @ to allow inves-tiened deposition. and he was asked
'?
V[M /,J,(
?D f
ti i.
'r^ T' tigation into detalla of concihation the followine questions:
I
-b.
bl
/
negotiations carried out without for-
"Q
- 10. Mr. Dixnn, do you not recall
- k. +yf.h
- s mality or ceremony certainly would aside from the files, meettnes with me
?
v a!'A, produce ch!!!!ng effect s on parties and other representatives of Da Pont in
, st os iW
- L g a pC that eficctively could emasculate en-which we uvnt into the questtom af this
(
- 4..ry tire conciliation procedure aQmauw acnon propn and in uhh l
B j. a b
at was put to you--
g(. {.
94-
' l ;-
'<r -
i Q 143 f enntmuinU-in which it was
.2 Action under Title VII of Civil put to sou that the ECOC oucht to ee-e Rights Act of 1964 by EEOC against ccpt the amtmative action prodram whh h H.
'h.
t employer and union, wherein em-was acceptabha to AEC and the OI CC!"
W I
h^
ployer and union moved for order di-The plaintiff refused to answer iceting EEOC onicial to answer cer-these questions and contends that the
,I tain questions propounded during subject of this inquiry is protected
'i w
course of deposition. Motion over-and not discoverable because the in-I i nled.
formation is privdeced and, in addt-
!;. }[
See also 7 FEP Ca.ses 975 tion, is not relevant to the issues in-Milton Branch. Rentonal Attorney, volved in tlus action.
i
.md Lavecne S. Tisdale, Atlanta Re.
It is apparent that the information i.
x h
~
.ponal Lltination Center. for plainti!I. sought deals directly with things said 8
Edgar A. Zingman Louisville, Ky.,
and acts donc and performed during 7
l
~
for defendant employer.
tl.e period of time when the parties N
Morris Borowitz, Louisville, Ky., for were engaged in conciliation negotia-
[
j defendant union.
tions. Two pre-suit issues may be ex-p
,t plored : s1i whether or not the f'
[r >
Full Text of Opinion cha rge was initially filed with the EEOC more than 30 days b(fore the
,l i
Hl! ODES BR ATCIIER.
District suit was instigated; O whether or Judge:-This action is presently be-not the Conunission attempted to,
.r,. j. fore the Court on the motion of de-and concluded that it could not, oh-
'I
.w,9.+ fendants, pursuant to Rtde 37 of the tain a conciliation agreement accept-G' ~ directing the plaintitT, Equal Employ-Rules of Civil Procedure. IP an order able to it.
'1j
--*"-- men t Opportunity Commission, litOI.E Ol' COURTI
]
through its. designated agent and wit-It is obvious from the authorities j i,O 4.3., W ness, to answer cen tain questions pro-submitted herein that this Court
+ + pounded by defendants durine the should not function as a reviewing g }-
cour.,e of a deposition taken on March court or court of appeals for the 14, 1974 Prior to the deposition, the Commis3 ion. Simo irly, t his Court plainti!T had moved for a protective should not permit an inquiry to be V
gg order pursuant to Rule ':6(c). Becau.se made into the it active merits of a Q:
of the time f actor, tl:e Court was un-conedation c! Tort i. the part of the c '4
_g
l
~r
~
.F 34
-.F F*? ** M,MIM55% yM,A,%g.yp B
.. ~.. _
q g g g,g g % -. _ % g >
m 4.w D
ggg
" fA l
m$
-.j f
0 FEP Cases 6G l
]!ORitlS v. CONN. OENERAL INSURANCE CO e o parties. Such questions are not re-tion against employer, in view of an- !
r ll 3
viewable execpt to detamine the ex-other federal district court's decision
~ ~ ^
[
E istence of the threshold issue of in Stone v. E.D.S. Federal Corp. 85 j k
y' whether or not the conciliation effort FEP Cases 213i.
occu rred. EEOC. v. Grif fin Whcci Company. 360 F.Supp 424. G FEP
-Class action - Class representa- !
' U.. - 'I l}
Carcs 297 iN D. Ala.1973) tive > 108.7531 l
J t
w idlow the parties the latitude Black Individual who is not collece e
l N
h b requested here to probe into every as-craduate and who has brought Title !
l I j N
' ' " ' ~ ~
pect and detail of nccotiations car-VII class action against employer m.x, i
ried out without formality or cere-not represent "craduates of nrede'ai.
I
'h'-)
I r
[d mony would certainly produce chillmg nantly or wholly black colleces, since 1
cliccts on the parties. This chilling he u not representative of that class. !
i
" 'k.
l q cliect could effectively emasculate the
-Class action - Former employee i 4 M cntire procedure and destroy the pur-
> IM.7533 j
g pose of the regulations. A fear of ll future judicial scrutiny would dis-Black former employee may repre- !
q L couranc good faith efforts to reach an. vent blacks curren*1y employed in his [
6 i
Titic VII class action against employ-acrecment acceptable to all con-1 cr. even though he has not worked
]
cerned. Delicate conediation c! Torts should be free and unfettered-for employer for two years, since he l
' j l
---MCrding to the record, the plain-did not voluntarily resign but Instead i i
g was invohmtarily terminated.
tilt has pro!Tered to the defendants l
j ropics of the contents of its investi-
-Dstention > 108.GD7
- n. _'
l
[
gatory files apphcable to thu case Federal district court will not ab. !
l winch a,..
not privileged nur made i
A confidenti. I by statute. It is not re-stain from proceeding with individ-,
l quired to dc more.
ual's Title VII action acainst emp'oy- !
y er. cren though identical claim filed WilEREFO.'E. the premises consid-by individual with state FEP agency y
,- ; c.;
MF ered. it is ORDERED AND
. D-is in conciliation stage: abstention i i gj JUDOED that 'he motion of the doctrinc applic.s where state court'a a
defendants to com?cl plaintifT to an-decision of unsettled question of state i
swer questions 14*i a.'d 143 is OVER-law would obviate necessity for fed-1 RULED.
i crat constitutional decision. but state i
o*
law is irrelevant in present case, and,
s t
federal-court claim is predicated upon i
federal statute as opposed to U.S. Con-i stitution.
.TIORRIS v. CONN. GENERAL i
da INS t'RANCE CORP.
-Stay of proceedings > 108.7373
- ~
l Stay of further proceedings in in-
)
U.S. District Court, dividual's Title VII action acainst em-1 District of Connecticut ployer would be inappropriate. despite Af0R RIS v Tile CONNECTICUT pendency in conciliation stace before a
1 i
k
.!g OENERAL INSURANCE CORPORA-state F8P acency of identical claim g
j TION, No.11-172. January 1G 1974 by individual, since there is nothing 7
.h
. n to indicate that stay of proceedines
+7 CIVIL ftlGIITS ACT OF IDG1 would either impede or f act'itate fur.
2 ther action on state level. and there f i
-Parties - Parent holding compa-la nothine to succest that concilla-l l }
ny > 108.742 g'.'
h tion efforts on icdcral level would be Corporate entity will be dropped as any more fruitful than those already 1
party-defendant to individual's Title undertaken on state IcVel.
d VII action. In view of affidavit of its
-['l I a
-Di l l secretary that it is parent holding um gI ris,ilegesovcry - Suhpoena duces te 4
company ha ving no employees and
> 108.81CG > 108.8108 that. Individual was emptnyed by whol-Emp!over sued by individual under 1
(h IV owned.sub:.idiary. Subsidiary will Title Vll is not entitled to have
-g lie sub3tituted as defendant in place quashed individual's subpoena duces 1
4 of parent.
tecum seckinc all materials involv-N g.
-Notice of richt to sue - Delega*
inc employer's negotiations with state t,o n > 10x 713..
FEP acency and EEOC and all in-i ternal o!!!'ec memoranda regarding Issuance of notice of richt to sue discussion of case, despite contention by employee of EEOC district office that dome or all of information soucht rather than by EEOC Ltself does not is either protected by attorney-c!!cnt deprive federal di. strict court of ju-privilege. is work nroduct, or would a
g; j
risdiction of individual's Titic VII ac-be inadmissible. Documents sought NdW.
, ""M~
$ n;rW-juMINE L
j s.~ m.
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p I
i M
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I y
.o.*-
y e.
3 EEOC v. du PONT C 7 FEP Cases 975 f
the position that this statttte is in-more effective relief for alleviating 9
.' i applicab!c to aliens who have the the problems described to the Court fg$
W "EhtPLOYMENT AUTHORIZED" en-in this action than any relief which o
- i 6.
4 dorsement on their Form I-9L For could be fashioned herein.
a i
q -
aliens without the endorsement, how-The motion for a preliminary in-
,4
-3 u
4 y.
v i ever, employment opportunities are junction is denied.
y limited to out-of-state jobs or to in-9 g
state emplosers willing to risk the SO ORDERED.
I i i
g.
I penalties of the statute.
,'}
l l *,
t 1
The failure of the INS to act promptly on ree.ucsts for the en-w j
i i
dorsement, combined with the Con.
EI:OC v. du PONT CO.
necticut statute, can create problems g
for aliens awaiting action on ch.mee U.S. Dia,trict Cettrt' i
of status petitions. especially when such petitions are based on marriate Western District of Kentuelty
,e ji i
i a
il to a citizen Obligations of support EQUAL EhfPI.OYh!ENT OPPOR-I
=
i may be Inctirred by virtue of the mar-TUNITY COAINIISSION v.
E.
L du 9
'l riace. Yet should the alien leave the PONT de NE110URS & CO11PANY.
1.
slate in order to get a job free of the INC.. and NEOPRENE CRAFTSh!EN i
8 burden of Connecticuf's statute. he UNION. No. 7874-B. January 23.1974 h
p a
1 s
t opens himself to a charge of a fraud-CIVIL RIGIITS ACT OT 19G1 I
i ulent ma rlage by virtue of his sep-
+
j aration from his spouse. If the allen
-Picading-l' reconditions to suit-
, I' i
~
stays in Connecticut and continues to Sture definite staternent
> 108.12 reside with his spouse. his acceptance > 10M01 f
"l of welfare disqualifies him from per.
Employer and union being sued un-l 5
~ i manent resident stattis, and his wife s der Title VII by EEOC are not en-r acceptance of wc! rare, even for the titled to more definite statement set-d support of cht!dren by a prior mar.
ting forth with parti,cularity EEOC's l
- j, riage, may open the allen to a charge comofiance with juttsdictional pre-J of a fraudulent marriage by virtue of conditions to suit, smcc EEOC s gen-
. i.
his f ailure to support his spouse.
eral allegation that all of necessary
\\
While such " Catch-22" situations statutory conditions have been per-l
$$.. were shown to be possible by the evi-f rmed is suf ficiently specific to sat-
,d I
ci dence presented at the hearine. there 1sf) requirements of Rule 8eait D of b
1 was no showmg of any immediate ir.
Federal Rules of Civil Procedure.
}
7 i
reparable injury to the named plain. l,;f M sonnt drin wintins-6 tlffs in this action. The plaintif fs urame uic u.socet classuwnoon o. $t Et?
' I to
,, i have so far managed to obtain em-n.m f ahenaze t
(c'uatig ag,anglegnt ige,tasui cag Q
nioyment. either in or out of state.
in j
The Court trusts that the INS will act Mnvnn nt opparf umn" impm: es nn auenc r = tu to t ra wi. rce oraham s. nichardson.
.i nromntiv and enttitab!v to tirant the
+ ]-
E 'i
'j 5"nt t *2 v s at 3:s-3:( nno rr.nthets soh t
"E31PLOYA1ENT AUTHORIZED" y
['.nUl'."",'nf"l',("',"I',','d' '
"L'[*"3,j' en-f i
dorsement where appropriate. But the Cotu t finds no present basis for rc+1rn. c of ahens within the united states t
o ra uni
- v. Huhardun. supra. 4u u s at the issuance of injunctive relief 3],7 p g u e yp i7:ng,,g,il n Hne ngil,$
i against the INS.
o ns n
i rt ut mod.. a equai prmcenon snaivs a
The real source of plaintiffs' prob-MJvfi$t."' ' ""***"*""'""is si 5
4 lems is the Connecticut statute which 1 tt ' rue n a me ci wfication in:nhes aci,on purports to regulate employment op-
""*tru 5"b the trelt"na'e intereat5 af the 3
--..~ portunities on the basis of alienage
[',",m'f;ts! ""t"'."{3'y $,n ';,"Ja'd '"p "'i 5 I
d and abens' status under federal law.
r 'r n
u th Plaintiffs have indicated they are er into hoeunv to exchene rederai pow-the anthornv to c m tot un ne ra nen-4 about to bring an action to restrain
'j
'f,,"d "ldf'; 7;','"$fd.($'t W,7j;dif,17,b"{
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the enforcement of ConnJen. Stats.
..g, 's..
i t,
Tnc 131-51k. Should the statute be found
. I awruon of.n a ut hornv to drny to
-M-to be invalid,- plaintiffs will gain far
$ hens the onnoitunity of cirnin t a ihrbhood
$8l,$'jn%"M"[l","j"c,d,$tl,* M', *J"djt g
(
~"***
n
-'The u ncon stit utionallt s of the statute nary deny them entrance ntui aonde for in ards-
's ould seetn to he patent. A state cannot dis-ca os they cannot hve. where they can.
not wot k
)
g.
rtinunate n.'amst r.hi ns nas e w hs'n tierewitt And, if buch a poher were nermis-
.e.
=
nhle. t he pr.tttical trault would be t Da 6 o Aceve a compelun 2 state Interest In Re t hose a lrift.t !. s.
411 US
- 17 e l'873 ).
be..pt inn u v.
inut hnitty et t he : ten o Con 'tess, matend
.f L i lawfu!!v a<ttuttted i
to the rounter umtt r the nou a u, 4 t3 U t* t;34 5 FFP L%es llu s ti,iD:
s-
-. : r..h.un v R ic h.i t dann. di US 30 st97tt en torm :. in a suh< tat ; u svuse atul m their ro tt e estent cou t.ec tient serks to dncrun-luf t wpc the pttrue contetted bv the ad-i i
f' !
.m*:e amomt cliens. rather than Mmph be-8tates minacti. m ontd be scs was'rd in such of the 3,
g g dern ahtns and cu pen s. us etawhnttluns v
as r h. ne to Ita;i h. 323 'U.S 33.n:ti r horpnattty." Truat
.2 Path l'
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L
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.n...
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7 pgp paseg 976 EEOC v. du PONT CO.
i h
y'
-Picading - Names of charging G FEP Cases 709 D.C. A!d., 1973 s :
I
.Y, I
,m4 pa rties - Underlying allegations and E.E O C. v. Griffin Wheel Co., G c
-M Tk..
4
> 108.72 FEP Cases 297 #N.D. Ala.,1973).
t i
M R'
Employer and union being sued un-In deciding this same question in t
l g,
E E.O C. v. Humko Products, Civ. Ac-der Title VII by EEOC are not en-tion No.73-295 s W.D. Tenn., 1973i, t
titled to have EEOC's complaint en-Chief Judge Bailcy Brown found that i
i.
larged to include names of charging the alicg.ations in that suit. which
- t.
r,arties and underlyinc allegations in
(
all the charges alleged, since Rule 8 were identical to paragraphs 8 and 9
'i tan t s of Federal Rules of Civil Pro-in the instant complaint, were suf-l ficient when they included "a general
.1; cedure requires only short and plain allegation that all of the necessary statement of claim showing that the nicadcr is entitled to relief, and plead-statutory conditions have been per-formed...
This Court, having re-l ings meet these requirements in that
}li j they f airly notify employer and un-viewed the complaint, pertinent stat-i utory prercquisites, and authorities.
I e,
t lon of nature of claim. Any addition-concludes that the allegations in the i
b :.
al information that employer and un-1
. ; 1.
ton need should be sought under dis-complaint are of sufficient specificity to satisfy the recuirements of Rule 8 covery provisions of Federal Rules.
.a,,16. For the forecoing reasons, the 0;i motions based on these grounds will
~
i Action under Title VII of Civil be denied.
H ;'
Rights Act of 19G4 by EEOC acainst Defendants also seek to have the
{
li' em;)loyer and union. wherein emplov-complaint enlarced to include the
]
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l.
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er and union moved for more definite names of the charging parties and i
m' statement. A!otion overruled.
the unactlying allegations in all the I
9' ) i, Laverne S. Tisdale. Trial Attorney. charecs stated. All that Rule 8(al(21
] '!
i
.1 Atlanta Regional Litigation Center, requires is "a short and plain state-l l
i for plaintiff.
ment of the claim showing that the k
i IT"
. Edcar A. Zincman, Louisville, Ky
pleader is entitled to relief". It is l
IT ' -
for defendant employer.
this Court's belief that the pleadines I
m e
7,e; Aforris Borowitz, Louisville, Ky., for meet the requirements of that Rule i q i
g defendant union-in that they fairly notify the defend-ants of the nature of the claim and l'* '
any additional information Du Pont
[3:
Full Text of Opimon and Union need should be sought un-
' li.^P O
BRATCIIER. District, Judce:-This der the discovery provisions of the
"\\j '
action comes before this Court on mo-Civil Rules. See,G9 Alitchell v. E-Z Way tions of the defendants. E. I. Du Pont Towers. Inc.,.
F.2d 12G. 14 WH H
')
O Il>f,I; !
de Nemours and Co., Inc., e Du Pont i Cases 257 85th Ctr.,1959): E.E O C. v.
?
I b
. 1"$.
M
)($
'b*
and Neoprene Craf tsmen Union (Un-llumko Products. supra, and United loni, for a more definite statement States v. Gustin Bacon Divis:on. Cer-pursuant to Rule 12 ten, Federal Rule, tain Tecd Products Cornoration. 426 dc ' t of Civil Procedure, 28 U.S C. Plain-F.2d 539. 2 FEP Cases 500 iloth Cir..
s 4
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tiffs cause of action being predicated 19706, cert. denied 400 U.S. 832, 2 FEP
(;
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upon Section 70Gifieli and s3) of Ti-Cases 995 e1970).
.I rI.'
tle VII of the Civil Rights Act of 19G4 WHEREFOR E.
IT IS ORDERED
-g,g*
%t as amended, 42 U.S C. I 2000e et seq.
AND ADJUDGED that defendants' fi 1
<Supp.
II, 19728 jurisdiction is Rule 12 motion is overruled.
Q p,
founded on 28 U.S C. I 451 and 1345.
j j hj It is defendants' po$ition that the t
allegations in the complaint are so k',p vague and ambicuous that they "can-l i s
fpi A), y /
not reasonably be required to frame i
W, a resronsive picading", and they are unable to determine whether the jur-e,
,. (. s isdictional procedural requirements
,,,L a
of the Statute have been met. Specifi.
T g *f cally, defendants contend the etch-
)it teen procedural steps delineated in 42 U S.C. I 2000c-5 are a pre-condition to
?'> '
the institution of suit by E.E.O.C and Jurlsdiction to attach, relyint upon must be alleged with particularity for n
i
.:,;,,,,g.
l b.i E.E O C.
v.
Container Corp, 35:'
F.
g (P
-i g1 r s
n 3
- Supp. :'G2. 5 FEP Cases 108 Of D. Fla.,
O' 19726: E E.O C. v. Western Electric Co..
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M!Ml.Fl!.ECOPY I
UNITED STATES OF AMERICA s
FEDERAL ENERGY REGULATO.7Y COMMISSION A"1I,r, # S 'r I 4
Black Marlin Pipeline Company ) Docket No. CP75-93 (Remand) i-n I.
PRESIDING ADMINISTRATIVE LAW JUDGE'S ORDER RULING ON PRIVILEGE ISSUES s
l (october 18,1979) j i
4 Participants in this investigation proceeding have found themselves at loggerheads over the privileged status of certain documents.
The Commission Staff sought to obtain i
the documents, through discovery, from Black Marlin Pipeline ~
Company and Union Carbide Corporation, two of the respondents.
In all, about 1,200 documents were the subject of claim of-privilege.
Negotiations resulted in a waiver by the Staff of its discovery demands ~for some documents and a with-drawal, by the respondent companies, of their claims of privilege as to other documents.
As a result, the status i
of about 150 documents remains at issue.
A procedure for resolving the disputes was proposed in a joint motion filed August 30, 1979 The Commission i
Staff, Black Marlin, and Union Carbide suggested in the l
motion that the disputes could be distilled into 13' cate-gories; the first 11 of which were categorized as " pure l
questions of law."
The resolution of each of the " pure
[
questions of law," it was specified, would. dispose of the issue of the discoverability of all documents governed by the question.
It was agreed that the determinatien of each question would be made on the basis of memoranda of law and review of one or more " representative" documents selected f
by the parties and submitted for in camera inspection and consideration.
If resolution of the legal issue presented was not deemed dispositive of the discoverability of the
" representative" document or documents, it was agreed that the discoverability of the document or documents (as well as all other documents falling in the category) would be based upon the applicable law as applied to the face of the document or documents presented.
The two rema'ining issues, Nos.12 and 13, were to be resolved on the basis of the documents submitted and the issue cited.
They were termed
" combined issues of law and fact."
The parties stipulated that, in their judgment, these latter issues could "be
. 1 resolved on the-face of the documents without taking evidence."
DC-B-ll e
6 i
O i
_.m-?
- --oomm m e o - -m a
On September 4,1979, the joint motion was granted, in an order which also approved the schedule suggested therein for the submission of briefs and memoranda on the All parties have filed such memoranda, and the issues law.
The issues as are now ra.pe for ruling on the merits.
framed by the parties, and the Presiding Judge's disposition of those issues, follow.
I Is a reonest for legal services, otherwise 1.
covered bv the attornev-client orivilege, not_
irivileged if it does not contain " facts" j
cnown only to the client?
Black Marlin contends that the attorney-client privilege protects all of a client's confidential communications to and is not restricted to his attorney from disclosure,l " facts" or information.
communications of confidentia Black Marlin primarily relies on In Re Ameicillin Antitrust i
J Litiration, 81 F.R.D. 377 (D.D.C. 19.78), wherein the court held that "the [ client-to-attorney] com-nmication need not-be of confidential information for the privilege to apply.
Instead,..
..a client communication is privileged if it l
" Id.
l was made-with the intention of confidentiality.
...StafT at 388 (Citations omitted; emphasis in original).
l on the other hand, cites Mead Data Central. Inc. v. U. S.
Decartment of Air Force, 566 F.2d 242 (D.C. Cir. 1977) for the proposition that the privilege applies only t.o confidential communications containing confidential information provided t
by the client:
The privilege does not allow the withholding of documents simply because they are the product
- of an attorney-client relationship.... It must also be demonstrated that the information is confidential.
If infor=ation has been or is later shared with third parties, the privilege does not apply.
M. at 253 (Citations omitted).
These cases are not irreconcilable.
The court in Amnicillin distinguished the Mead _ holding on the ground that the court was there addressing the role of the attorney-I client privilege in an Exemption Five claim arising under the Freedom of Information Act (FOIA)i 5 U.S.C. 552(b)(5).
The Ameicillin court specifically t}oted that.FOIA cases involve special policy considerations, including vindication of Congress' intent to permit e Jmprehensive public access to I
In Re Amnicillin Antitrust Litiration_,
government records.
suura, 81 F.R.D. at 388-89 n.21.
i
_3-Restricting the privilege to clients' confidential communications to their attorneys which contain confidential information (" facts known only to the client") 'would not advance the policy of encouraging corporations to seek out and correct wrongdoings on their own.
See Diversified Industries Inc. v. Meredith, 572 F.2d F6,, 610 (8th Cir.
(Rehearing en banc).
Assuming that a request for 1976) legal services meets all other criteria for application of the attorney-client privilege, I concluda the communica-tion need not contain " facts known only to the client" to qualify for the privilege.
2.
Is legal advice, otherwise covered by the
. attorney-client urivilege, not orivileged if it does not contain facts known only to the client?
At the outset, it is worthwhile to eliminate an
)
i ambiguity caused by the manner in which the question was framed.
Black Marlin's argument and analysis are predicated on the premise that all communications from an attorney to j
a client are privileged because they necessarily disclose the contents of the client's confidential communication to the attorney.
This gremise is incorrect as a matt.er of privilege" phrase "otherwise covered by the attorney-clientcould, how law.
The the contrary.
It is not so construed here, because to de so would run contrary to the parties' main purpose, to obtain a ruling on the legal merits of their position.
i i
The substantive issue presented in this second category concerns the scope of the attorney-client privilege as it applies to legal advice.
As was the case with Issue No. 1, the Ccamission Staff mainthins that the advice of an attorney to a client is privileged only if it contains confidential j
facts.
Black Marlin contends that since disclosure of legal advice " inevitably" reveals the substance of the client's confidential ec-mication, it is privileged.
(
The authorities express different; views on the scope of the attorney-client privilege as applied to legal advice.
See, SCM Coro. v. Ierox Corn., 70 F.R.D. 508, 520-21 (D.
Conn. 19'76); Cc= ment, "The Attorney-Client Privilege:
Fixec Rules, Balancing, and Constitutional Entitlement," 91 Harv.
L. Rev. 464, 472 (1977).
The so-called broad; view, espoused by Wigmore, protects any legal advice from an attorney to his client.
8 Wigmore, Evidence 52320 (McNaughton rev.
l i
,/
_4-1961) (hereinafter Wigmore); Natta v. Hogan, 392 F.2d 686, 692-93 (10th Cir. 1968).
The rationale for this view is that disclosure of an attorney's advice might lead to detection of the client's commmi-cation anc should therefore be proscribed in,all cases.
M.
tA more restrictive position holds that legal advice is privileged only to the extent that its disclosure would reveal a client's confidential communication.
Attorney General of the United States v. Covin rton & Burl:.nz, 430 F.Supp. 1117, 1120-21 (D.D.C. 1977);
derbert v. aando, 73 '
i F.R.D. 387, 398 (S.D.N.Y.1977); Matter of Fischel, 557 F.2d 209, 211 (9th Cir. 1977); SCM Coru. v. Xerox Corn.,
suura, at 521;(Burlington Industries v. Exxon Corn., 65See alsq, Mc F.it.D. 26, 37 D. Md. 1974).
s 889 (2d ed. 1972).
The restrictive view is preferred because it adequately satisfies the rationale for the broad view i
and.is also in keeping with the policy of restricting, rather than extending, privileges which have the. effect of excluding relevant evidence from the factfinder. :. SCM l
Corn. v. Ierox Coro., suura, at 522; Matter of Fischel, suura, at 212; Fisher v. United States, 425 U.S. 391, 403 (1976).
These latter considerations weigh heavily in an investigation -
proceeding conducted by a Federa). administrative agency.
~
The burden rests with the proponent of the trivilege to establish its applicability.
Annot.,15 A.L.L Fed. 771, l
779; In Re Amnicillin Antitrust Litization, suura, at 394; Matter of Fischel, suura, at 212.
In the present context, this would, at a minimm, require a showing that the advice i
reveals the substance of a confidential con:munication from x
the client.
Since Black Marlin chose to adopt the broad N.
view, it did not furnish for inspection by.the Judge the i
request giving rise to the legal advice.
Consequently, there is no way of telling to what extent the legal advice discloses the substance of the request.
l In the absence of a showing that disclosure of the legal f
advice in question would reveal a client's confidential.
communication, I conclude the documents categorized -under Issue No. 2' are not privileged.
3 Is a comm nication fron an attorney to a client detailing his progress in Derfo mine legal c
services, otherwise covered by the attornev-client Drivilege, not urivilezen if it coes not contain facts Known on1v to the client?
m w
I
. _, _ _. j y
i
~. _ _.._ _. _. _._ __._. _.,-
j
t
.s lli i As with Issues Nos. 1 and 2, Staff argues that an i
attorney's communication to his client must contain con-
.i fidential information in order to qualify for the attorney-client privilege.
Black Marlin contends that an attorney's i
progress report "necessarily" divulges a client's confidential l
communication and thus is privileged.
f The attorney-client privilege is designed to protect l
confidential disclosures by a client to an attorney made in l
order to obtain legal assistance.
Fisher v. United States, suura, at 403 (citing Wigmore, suura, 82292; McCormick, 33upra, 887, at 175).
Since the privilege has the effect of wizhholding relevant information from the factfinder, it applies ~only where necessary to achieve its purpose of encouraging clients to make full disclosure to their attorneys.
M.; Wigmore, suura, 82291 at 554 I
Consistent with these principles, and those discussed.
under Issue No. 2, suura, an attorney's status report to his client is privileged only to the extent that i,t reveals a i
client's privileged communication.
The two documents 2
submitted for consideration under this issue disclose no i
more than that the attorney was working on some matter j[
apparently of interest to the client.
There is zio reference j tj to (or indication of) a request for legal advice or assistance.
- l
.I conclude that t documents in this category are not
.i!
privileged.
H
{
(
4 Are reauests for legal services and legal ady'ce, otherwise covered bv the attornev-i I;
client urivilege, not urivileged if the i
communication is between in-house counsel and outside counsel?
]
]
To be privileged, communications between a corporation's 1
house counsel and its outside counsel must reflect infor=a-J tion originating with the client and must be divulged under such circumstances as would make the communication a Q
privileged one between the client and house counsel.
,9 Annot., 9 ALR 3d 1420, 1423 Where the privilege applies, house counsel is, in effect, acting as the client's agent, 4
confidentially seeking' legal assistance on the client's behalf.
Dunlan Coro, v. Deering Millikin. Inc., 397 F.Supp.
1146,1167 (D. S.C.1974); Burlington Industries v. Ercon Corn., suura, at 36; Simon "The Attorney--
Client Privilege As Applied to Corporations," 65 Yale L.J.
953, 985-86 (1956).
J l
.4 j
y k ---
_=
~**
The single document submitted under this issue is a letter from house counsel,to outside counsel discussing legal aspects of a curtailment proceeding in which outside counsel is apparently involved, and asking for transcriptsT of the hearing.
Therefore, it is not privileged.
advice or assistance.
Are client's internal memoranda and communications
'5 which contain legal advice covered bv the attornev-client Driv 11ege?
The only representative document in this category is a report of a 1972 meeting at which certain pro One of the items reported was and its house counsel. counsel's opinion on the client's legal position matter.
Asdiscussedabove,legaladviceofanattornehis protected under the attorney-client privilege only to the extent it discloses the client's privileged commication.
On its face, the report reveals no privileged co=mmications Therefore, it is not prote.cted under the of the client.
attorney--client privilege.
Does the attornev-client urivilege attach to 6.
an attornev's notes and memoranda regarding legal advice given to the client?
N The parties essentially agree that the privilege applies to an attorney's notes or memoranda on legal advice given to.
a client " insofar as they... are a report of confidential
- communications...." Colton v. United States 306'F.2d 633, 639(2dcir.),c_eri,. denied,371U.S.9'51(19$3). But e
It asserts that Black Marlin has gone one step further.an attorney's adv made in confidence.
The documents, house counsel's hand-written notes (L-8250) and " memorandum for file" (H-34343), both disclose To repeat nothing of the client's request for assistance.
a theme noted above, legal advice, be.it recorded or remembere l
is privileged only if its disclosure would divulge a client's_
See, discussion under Issue privileged communication.It follows that an attorney.'s own notes on leg advice given must be shown to be records of the client's No. 2.
privileged communication before any privilege can attach
?
w
.l.
~
- ----~~
o 0 h
e" i
to them.
Annot. 15 ALR Fed. 771, 776-77, 799-801; SCM at 523; United States v.
Coro.v.XeroxCoro.,suora(7thCir.1973).
Brown, 478 F.2d 1038, 1040 No such showing was made here.
It is also significant that the document on which house counsel's hand-written notes are found indicates j
that the advice-generating request for comments was also made to non-lawyer corporate officers.
(See,Docusedt No.
j i
L-8250).
A document prepared for simultaneous review by legal and non-legal personnel is not privileged because it does not have as its primary purpose.the acquisition of legal advice.
United States v. International Business Machines Coro., 60 F.R.D. 206, 213 (S.D.N.Y.1974).
l I conclude that the attorney's notes and memoranda i
are not privileged under the attorney-client privilege.
[
7 Is uroucsed contract lanzuaze, drafted by an ll attornev for the client's review, covered hv i
i the attornev-client urivilege?
.I Black Marlin's. position is that a draft c.o$ tract, t
prepared by an attorney for the client's revitw, constitutes i
legal advice in that it reflects the client'.s confidential comm4 catien.
Staff argues that a contract draft cannot be confidential because it is intended for disclosure to Y!
third parties.
In response, Black Marlin points.out that J
the ellent is free to reject a draft, so disclosure to third parties is not necessarily contemplated.
s.,
1 Even assuming that a draft contract, prepared by an~
attorney for his client's review, amounts to legal advice, i
d Black Marlin has not shown that the draft in question jl discloses a client's confidential cocaunication,.and that is j
the critical factor.
Moreover, it is entirely possible that y
the attorney was acting, in this instance, as a " mere scrivner" simply translating the intent of'the parties o
u -
into the legal terminologf of a contract.
See, McCormick, 888 at 180 n.26; Pollock v. United States, 202 F.2d 3
suura,86 (5th Cir.),.qgra. denied, 345 U.S. 993 (1952).
J 281, 2 I am not persuaded by Black Marlin's spe'culation that the attorney and client may have used the exchange or drafts 3
as a method of communicating the client's' request for legal advice.
The draft contract was, if approved by the client, destined for disclosure to third parties.
The document 1
3 q
?
mI o
e'
y@
y ;
J u&
I cannot, therefore, be held to disclose a client's confiden-y l
tial communication.
The contract draft is not covered by 4
the attorney-client privilege.
QQ 8.
Is a recuest for advice about oblications
?
imuosed by the Natural Gas Act. which would otherwise be covered by the attornev-client
,4 privilege. not Drivileged solelv because an g.
attornev is not recuired for FEftC filings?
j[
A client's request for advice is not privileged sim by virtue of the fact that it is addressed to a lawyer. ply
"'l Diversified Industries v. Meredith, 572 F.2d 596, 602 (8th gl Cir. 1977); Underwater Storace Inc. v. United States Rubber ig Co., 314 F.Supp. 546, 547-48 (D.D.C. 1970); Wigmore, suura, g.
B2303 at 584.
A client's request for advice must among
- 5. ;
other things, be made to the attorney in his capac,ity as iW.
such.
Wigmore,Es2017, 2021-28.
suora, 52298; 8 Wright & Miller, Fed. Pract.
iE '
& Proc.:
Civil g
a Staff contends that since -attorney's are not required *.-
Q for making FERC filings, a request for advice on duties b ?
under the Natural Gas Act is not a request for legal advice.
Aii l
Staff seizes upon some langua kj;
-- United States, 205 F.2d 734 (ge in the case of Falsone v.
i 5th Cir.1953), to the effec.t j
that practitioners before administrative tribunals are g E sufficiently " professional" to be subsumed under the attorney \\
g E client privilege when the agency's regulations impose attorney-like professional responsibilities upon them.
. 4 F
Id. at 740 (citing Wigmore, suura, 52300(a) at 583-84).
IEcording to Staff, because FERC regulations permit appear--
- ! 9' U
ances by any " qualified representative," (18 C.F.R. Bli4(a)(1))
@ E, and there has never (to Staff's knowledge) been disciplinary p E action taken against a FERC practitioner,.the attorney-client j{,'
privilege cannot apply.
While Staff's point is both novel and imaginative, it is nonetheless % terial to what should be our central.
concern, namely, whether the client's request sought' advice i
that was distinctly legal in character.
McCormick, suora, 888; 81 Am. Jur. 2d, Witnesses 5182; Note, " Functional T@ -
Overlap Between The Lawyer And Other Professionals:
Its i. -
Imolications For The Privilegsd Coc=unications Doctrine,"
l 71}YaleL.J. 1226, 1246-49 (1962).-
- i Perusal of documents submitted in this category adequately demonstrates that the client's request was for j
t advice of a legal nature.
Although documen d H-42406 J',
L l::
s 4
i w
r n
f3 '
l[' Y g
-. -. ~..., -,. _ -. ~ - - - - -. - - - - - -
V
~ ~ -
a 12
- E l
t through H-42408 and SH-704 through SH-705 contain inquiries i
which contemplate answers based upon business and technical considerations, in contrast to legal analysis, the attorney's response will ultimately rest on his legal judgment.
- See, Eutectic Coro. v. Metco Inc., 61 F.R.D. 35, 40-41 (E.D.N.Y.
1973); ScM coro. v. Xerox coro., suura, at 517 As such, i
and because the client's requests are "otherwise covered by client privilege," the documents in question the attorney d and protected from discovery.
are privilege 9
Does the work-oroduct doctrine anulv to the i
work uroduct of a urior lititration?
Staff contends that the work-product doctrine does not protect work products of prior litigation from discovery.
j Black Marlin contends that it does.
l The qualified work-product doctrine and its underlying rationale were first articulated in Hick =an v.. Tavlor, 329 U.S. 495 (1947), and later codified in Rule 26(b), Fed. R.
I Civ. P. */ In Hickman, the Court described the necessity for protection of an attorney's work products in -the following language-I Were Buch materials open to opposing counsel on i
i mere decand, much of what is now put down in I
writing would remain unwritten.
An attorney's l
thoughts, heretofore inviolate, would not be -
}
his own.
Inefficiency, unfairness and sharp practices would inevitably develop in the giving t
of legal advice and in the preparation of cases
.g
- i!
for trial.
The effect on the legal profession S
would be demoralizing.
And the interests of the clients and the cause of justice would be poorly
[
served.
M. at 511.
t Although there is some contrary authority, the prevailing-fj view supports protection of an attorney's work product t
regardless of whether it relates to present litigation or j
t k
- /
As enunciated in Hickman v. Tavlor (329 U.S. at 512) and incorporated in Rule 2oto), Fed. R. Civ.
P.,
5 the doctrine is not absolute.
Access to an attorney's work product may be had if the relevance, substantial
.l need and undue hardship requirements o'f Rule 26(b)(3) are met.
Since Staff has made no showing in this regard, resolution of the legal issue presented will
. determine the discoverabilitf of documents in this category.
w t
q E
E i:,
Q _.
--- ~
In Re Murchv, 560 F.2d 326, 335 (8th Cir.
past litigation.
United States v. Leezett & Platt. Inc., 542 F.2d 1977);59-co (6th Cir. 1976); Dunlan Coro. v. Moulinare et 655, 6 Retorderie de Chavancz, 487 F.2d 480, 483-84 (4th Cir.
These cases reason that the underlying policy of l
1973).
protecting the effectiveness of a lawyer's trial preparation 6
and preserving the integrity of the adversary process require that work product of prior litigation be covered by the rule.
Civil Id.; see also, Wright and Miller, Fed. Pract. & Proc.:
Ffo24 at 200-201; Comment, " Work-froduct Privilege Extends to Subsequent Litigation," 27 Vand. L. Rev. 826, 833 (1974).
In contrast, the cases which refuse to extend the work-product doctrine to work product of prior litigation focus on the fairness aspect of the Hick =an rationale for They reason that the party seeking discovery the doctrine.
of the work product of prior litigation " seeks not to obtain the benefit of... [an adversary's] industry in the preparation of the case at bar for trial" and thus that Tobacco &
the material sought should not be protected.
Allied Stock. Inc. v. Transamerica Coro. }.16 F.R.D. 534, 537 (D. Del.1954) (Emthasis in original See also, 207 i
Hanover Shoe, Inc. v. United Shoe Machinerv Coro., Inter-F.Supp. 407, 410 (M.D. Pa. 19o2); United States v.
national Business' Machines Coro., 66 F.R.D. 154, 178 (S.D.N.Y. 1974).
N While it may be that allowing work.. product protection to cover the work product of prior litigation would not advance the policy of preventing an adversary from gaining' unfair advantage, its application would serve to, further the more fundamental policy against invading the privacy of an attorney's course of preparation, thus preserving Hickman v. Tavlor, suora, his morale and effectiveness.
at 512; United States _ v. Nobles, 422 U.S. 225, 238 (1975).
These are-important goals which also deserve promotion.
I conclude, therefore, that.the work-product doctrin'e does apply to the work product of prior litigati~on.
Material covered by the doctrine may not be discovered over objection.
f 10.
Is a conmnmication from a -high-level to j
a low-level emulovee, orderine that data be rathered, covered by the work-oroduct' x.
2' doctrine wnen the reauest originated witn an attornev who intended to use the data f
in uendine litization?
3 l4 alt m
N4 w
1
!I f k _ _... }
-i i
- e There is only one document which, the parties agree, raises this issue.
It is a hand-written memorandum -from a "high-level" employee to various " low-level" employees of Union Carbide -enumerating the information which an
~
Administrative Law Judze ordered for production.
Black Marlin insists that this document is protected under the work-product doctrine as it was " prepared in i
anticipation of litigation."
Staff argues that since the document was not prepared by an attorney-for use 'in a trial, the work-product doctrine does not apply.
l Work-product protection extends beyond the writings i
j of an attorney:
l At its core, the work-product doctrine shelters i
the mental processes of the attorney, providing a.
j privileged area within which he can analyze and prepare his client's case.
But the doctrine is t
an intensely practical one, grounded in the
~
realities of litigation in our adversary system.
i One of those realities is that attorneys often j
must rely on the assistance of investigators and other agents in the compilation of materials in.
j preparation for trial.
It is therefore necessary that the doctrine protect material prepared by
- j agents for the attorney as well as those prepared
-j by the attorney himself.
United States v. Nobles, suura, at 238-39 3
}
As we have seen, the only document at issue consists.
essentially of a directive for the collection of data.
The 2
.l directive originated with an Administrative Law Judge, not 5
with the attorney.
A communication made by or to a party's agent which was not requested by, or prepared for, an attorney is outside the purview of the work-product doctrine 4h as embodied in Rule 26(b)(3) and (b)(4).
Thomas Orzan Co.
]
- v. Jadranska Slobodna Providba, 5A F.R.D. 3b7, 372 (N.D.
i Ill.1972); Scaulcing v. Denton, 68 F.R.D. 342, 345 (D.
T Del. 1975); Atlanta Coca-Cola Bottline Co. v. Transamerica Q
Ins. Co., 61 F.R.D. 115, 116 (N.D. Ga. 1972); Burlineton Industries v. E:ccon Corn.,
suura, at A2; l
McDouzall v. Dunn, 4o8 F.2d Ab8, A73 (4th Cirr 1972);
Vireinia Electric & Power Co. v. Sun Shinbuildine & Drv See also, Dock Co., 68 F.R.D. 397, 402 (E.D. Va. 1970 [.4 Moore's, Federal Practic 8 Wright & Miller, spera, s202A at 196-99; Annot., 35 ALR 3d 412, 429 w
l Ea l
1 4
E
(
A
, Ih ~..
~-
e-
i:j g
o i ;
- 12.-
) j i f Examination of the document does reveal'some references p
to the company's le al strategy for compliance with the f'
Administrative Law udge's order.
Nonetheless, since the issue is framed in terms of whether a communication " ordering W
that data be gathered" is covered by the work-product doctrine, further consideration of this aspect of the h
c document is unwarranted.
I conclude the document is not i l t:5 exempt from discovery under the work-product doctrine.
U F s 11.
Are Union Carbide's internal documents P
regardine nossible crocosals to settle d
a
,this litigation urotected from disclosure?
i Black Marlin relies on language in,section 1.18(e) of I
the Co d ssion's Rules of Practice and Procedure (18 C.F.R.
l l 1.18(e)) conferring privileged status on certain communica-J if.
tions relating to settlements.
Tie language cited appeared l
N in the old version of the rule and provided that " proposals of settlement... shall be privileged and shall not be admissible in evidence against any counsel or person claiming such privilege."
Effective June 15, 1979, the rule was changed to read:
" Offers of settlement... shall be privileged and shall not be admissible in evidence against i
(31.18(e)(1) v)).
any person claiming such privilege."
Procedure for Submission of Settlement Agreements Order No.
l 32), Docket No. RM78-lo, issued June 13, 1979, mimeo. 3 j
There is no indication, however, that the change in wording q-i
(
of the privilege applicable to abortive settlement proposals
% 'f portended any alteration of the substance of the rule.
r The Staff's argument is that section 1.18(e), by its S
ter=s, governs only the admissibility of evidence, as j
w opposed to its discoverability.
In any event, Staff arguesi g
the privilege protects only " settlement proposals," not y;
settlement discussions.
.*9 The
]
The Staff's position is far too disingenuous.
j Commission, in section 1.18(e) of its procedural rules, j
has determined to make settlement proposals or offers lj,
'" privileged."
Under Rule 26(b)(1), Fed. R. Civ. P.,
,l The only document j
privileged matter is not discoverable. submitted for consideration is, in fact 1 p r
settlement.
See, Document Nos. L-20023 throu.
L-2003 5 3 q I conclude that it is, therefore, immune from
'scovery.
j L$
-5 1 3,.; '
To the extent that other documents in this category
]N
' M,t
/p?,
are discussions of settlement, the Federal Rules of Evidence 5 ; 1%
offer guidance.
Rule 408, Fed. R. Evid., provides ir I
. f@
.[
ia
.1 1.dr U4
~ Q:.
.., 1_-
- y
- ~ ~ ~ ~
T.,
+
. L 21 <
psrtinent part that "[e]vidence of conduct or statements
}g
'nade in compromise negotiation is... not admissible."
fhe inadmissibility of settlement discussions is regarded ac Rule 408's "most significant departure from the common pg law."
2 Weinstein, Evidence, paragraph 40$[03] at 408-19;.
See also, Rothstein, Rules Of Evidence For The United States l
Courts And Magistrates,119 (2d ed.1978).
The policies that underlie 81.18(e) of the Commission's
- [
procedural rules and the Federal Rules of Evidence's ban on l
admissibility of settlement discussions would,best be served a
by refusing to mandate discovery of the documents subsumed g!
l under this issue.
Hence, I conclude that they are protected p:
from discovery notwithstanding the Staff's technical quibbles about the scope of the rule.
l t
12.
Is the attornev-client urivilece inannlicable l
to the contested documents because thev contain business, rather than legal discussions?' 4
- -l p;
For the purpose of resolving the issue presented, it 5
63 need merely be noted that advice of counsel that principally p!
involves business, rather than legal, judgment is not protected under the attorney-client privilege.
SCM Coi,o.
g;ij
- v. Xerox Corn., suura, at 517-18; Underwater Storace,Inc.
pi Ml suura; United States v.
- v. United States Rubber Co.,6-47 (M.D. Pa. 1973); Annot.,
Schmidt, 3c0 F.Supp. 339, 34 98 A.L.R. 2d 241, 248.
r I
Some of the documents proffered in this category are not privileged because their essence is mere business W!
advice.
The designations given to such docu=ents are as 9:
follows:
H-9380, H-9381;8, H-12129and H-30578, H-30579 [same document]
b; l
{'
H-12127, H-1212 H-22941, H-22942 r.
H-34045, H-34046 i
tf
- 's Certain other documents proffered in this cate6ory are not privileged because they contain legal advice wh2.ch has
- T not been shown to disclose a client's privileged communica-tion.
They are:
j' j [,
?)
r:
.r k~
w l'
I i
,8 l'
n --.-
y n
'i l
_ 1E -
wl
~
1 i
L-15051 g
L-15197 k
l
)
H-12769 H-31276, H-31277 H-34047 H-34519, H-34520, H-34521 The following documents are not prifileged because the substance of the client-to-attorney communication contained therein was obviously already known to third parties:
),~
3 L-15033, L-15034 f@g L-15045 L-15046 i
The following documents are protected from disclosure s
under the attorney-client privilege:
2
~ L-4336, L-4337 L-15303, L-15304, L-15305
'?
j L-20319 4
-Q L-15413, L-15414, L-15415 4
H-12958
. N,
.[
H-13102, H-13103
[
., o Documents L-15094, L-15095, and L-15096 constitute
.9 E.
a three-page attorney-to-attorney communication which is apparently of a consultive nature.
Its essence is a request
- h. l by house counsel for legal advice and legal service.
Although l
2 Black Marlin did not include the identity of outside counsel (the recipient) in its "index of personnel," we can take i
administrative notice of the status of a former FPC General j
Counsel and conclude, therefore, that this coccunication 1,,
is privileged..
13 Are the contested documents arisine from
'l yl this litigation urotected from disclosura d
by the work-oroduct doctrine?
Documents L-15405 and L-15406 are a hand Isritten memorandum from a Union Carbide employee to,a Washington
@ ?!
- .h@
er lawyer, Mr. B. F. Kiely.
Copies are sent to six other persons, some of them non-lawyers.
The communication does o a 5 i.
l l E' w
Q3.
g
-m---,~~~----
y
_._...... y
y.
4 ;; '
3 g:,
$ t v t Q.
not on its face appear to be the work product of an attorney.
The fact that it transmits material requested by Mr. Kiely A
does not make it his work product.
It is, therefore, fully discoverable.
The remaining four memoranda, documents L-20036, L-20037; L-20248, L-20249, L-20250; L-20280, L-20281, L-20282; and L-20295, L-20296 are house counsel's status reports to his i
client on the progress of proceedings in prior phases of this case.
These documents do, in large part, contain Union Carbide's house counsel's perceptions of the client's 2
case and therefore qualify as the work product of an attorney.
Absent Staff's showing of substantial need for these materials and inability to obtain their substantial equiv-alent elsewhere without undue hardship, these documents are in:mune from discovery.
d, 3
[
4, i
Q\\
4, e
Isaac D. Benkin Presiding Administrative Law'. Judge
- i 3; '
r4 h,.,
9
(
x I
m.
! Gl 1 l, a:
i' s
w b
k, e
f i
I s
I I
?
i
.\\
i
)
P '
~*
- ==e*=
i
, 5.
o{
t Ekh1 BIT D 9
I
lW e
l Y.
O 20 AdL2d DECISIONS 603 03 j
ky compositions. In that connection the Commission has made
~a.
It clear that it " considers these ' Guides' to be merely ad-vi s o r y. "
_ @2; 3.,.
In response to the request "for an Advisory Opinion.
La, p arsuant to Rule 1. 51 of the Commission's General Proce-M.
dures, as to the lawfulness of proposed revised labels", the Commission advised that the labels submitted would appear pr to be inconsistent with the advice set forth in the Guides and fd:
therefore inconsistent with the requirements of the law re-3 garding the use of deceptive acts and practices. The rect-E plent of this advice, of course, is free to disregard it. If
_g in disregard of thle advice, deceptive acts and practices should be used and brought to the attention of the Commis-
_ST,-
ston, the probabilities are that it would have reason to be-
- L s "
lleve that Section 5 of the Federal Trade Commission Act f
was violated in that respect and perhaps issue a complaint d.#
to that effect. If so, the person charged with any wrongdo-M ing would be provided with an opportunity for a hearing for j"*
the purpose of demonstrating that the challenged conduct was not deceptive and was not violative of Section 5 of the Federal Trade Commission Act.
_t[
Obviously no provision of the Constitution, of statutory law or rule of fairness in or remotely related to due process requires a hearing at this time on the question of whether h
the Commission provided faulty advice in its Advisory Opin-I ion or in its Guides. To think otherwise would blur distin-sa 2 4..
guishing requirements applicable to utterances and actions hc.
by gove rnment agencies and government officials and would promote confusion regarding provisions of law making dis-g/^
tinctions in the requirements applicable to one utterance or C
action when compared with other utterances or actions.
"t.
h*
(
- f 9.C SEEBURG CORP.
l b.
Federal Trade Commission, Octobe r 25, 1966 Docket No. 8682 p
I 5:
')N 3a.1 (5b. l(1), 5c. 2(2)} Sufficiency of notice of precomplaint consent order procedures.
g
&l-I N
Contention that the Commission's rules on pre-f complaint consent order procedures violate the no-tice requirements of Section 3(a) of the Administra-l i"
w tive Procedure Act in that they pinpoint exclusive
?[]"
responsibility for consent negotiations with the j
Ed',
Division of Consent Orders, which has no connec-
.l tion with investigation or litigation, as. contrasted j
@I(
with staff counsel assigned to the Bureau of Restraint fe 7t' h
l i
604 PIKE AND FiscHEn, ADMIN!!TRATIVE LAW (2d) of Trade who are inherently adversary advo-l cates predisposed against a proposed respondent
{
whose conduct they have investigated with an eye l
toward litigation, is rejected. The Commission's f
rules, read together with its statement of organ-Ization, put respondents on notice of the nature
{
of the staff participation in settlement proceed-t ings. In any event, respondent had actual notice of the role of the Bureau in settlement proceed-l
{
ings and of the fact that in such proceedings ex i
j parte contact with the staff was considered l
D proper.
1 J
3a.1 (Sb.1(1)] Sufficiency of notice of precom-
{
plaint consent orde r procedures.
u Under the Freedom of Information Act, as before its enactment, the standard by which pro-cedural rules (such as those relating to precom-i plaint consent order procedures) must be judged in order to determine whether they comply with the notice requirements of Section 3(a) of the Ad-ministrative Procedure Act is whether they are realistically informative to the public of the ad-ministrative procedures available.
h 3a. 3 (3a.1] Penalty for failure to comply with notice requirements of Section 3(a).
Even if respondent's challenge to the Com-l mission's rules on precomplaint consent order procedures on the ground that the procedure ac-tually followed had not been published should be l
sustained, the penalty provisions in Section 3(a) of the Administrative Procedure Act would give r
respordent no standing to sue for dismissal of the complaint. The only penalty in the statute for the failure to make notification in accord-o ance with its provisions is to excuse compf t-ance by outsiders with the requisite procedure.
Sb. l(1) (2d. 2, 5.1, Sb. 2(1), Sc. 2(2), 6a. Z(2),
8.1] Propriety of consent order procedures.
(
Contention that the Commission's consent order procedures are contra ry to the Adminis-trative Procedure Act and constitute a denial r
of due process because they deny respondent f-a hearing and effective representation of coun-set and allow the Commission to communicate ex parte with its staff is rejected. The defini-tion of " adjudication" set forth in Section 2(d) of the Act does not apply to such procedures.
Accordingly, the requirements for hearing spelled out in Section.s 5(c), 7 and 8 are not applicable.
r Oe $5lh
L 20 Adl.2d DEctstoxs 603
_q 7c.13(7) (5.1. Sb. l(1), Sb. 2(2). 8. Il Right to information in agency ponsession in the course of consent order procedures.
5 7 In the course of consent order procedures, i
respondent is not entitled to intra-agency com-i ment on its settlement proposals on the ground that this is necessary to afford it a fair hearing.
since a hearing is not required in precomplaint 7
settlement procedures.
f 7c.13(7) (Sb.1(1), 5b. 2(2), 6a. 2(2)] Right to y
information in agency possession in the course Q
of consent orde r procedures.
A respondent is not entitled to intra-agency memoranda to the Commission commenting on A
d consent negotiations prior to complaint on the 9.
ground that withholding such documents would
~ N'P deprive it of effective representation of coun-sel. Although respondent has a right to be rep-resented by counsel, the degree to which counsel may participate in representing a client before
_z i
the Commission will vary with the nature of the j
proceeding. Due process does not require that 4,
the informal settlement procedures be converted into a preliminary trial on the Commission's de-cisions to is sue complaint.
2-L 7c.13(7) (3c. 3(1), Sb.1(1), 8b.7(8)] Right to dis-closure of intra-agency memoranda.
}
_A A respondent is not entitled to intra-agency
_Ay memoranda to the Commission commenting on consent negotiations prior to complaint. Pre -
_ g servation of the integ rity of the administrative y
process precludes an inquiry into the agency's ff.
mental processes leading to the decision on whethe r to issue complaint. The Freedom of y
information Act does not enlarge the discovery i
rights of a private party engaged in litigation Q*'
with the Commission to secure documents of this nature which have hitherto never been con-T-
sidered as subject to discovery in the Commis-n A.
sion's proceedings.
wf (Ruling on respondent's motion to vacate the complaint]
.y.
BY T11E COMMISSION. (Commissioner ELMAN con-
"r, -
'T curring in the result). This matter is before the Commis-sion on respondent's motion to vacate the complaint certi-w fied by the }{ earing Examiner with a recommendation a
that it be denied.1/ In essence, respondent's motion to va-cate alleges,.in support of its request, that the Commission's kg, O-
~
9-
, T 1/ (Footnote on following pagel..
6.
k'c
?%
. %k.
'y i
1>
,I 606 PIKE AND FISCllER, ADatINISTRATIVE LAW (2d) lf i
IL consent order procedure preceding issuance of complaint i
i violates the Administ rative Procedure Act, the Freedom of I
Information Act of 1966, and administrative due process.
p[
Specifically, Seeburg attacks the Commission's consent or-i der procedures as deficient on three grounds. It first al-
[
r leges that the Commi s sion's Rules of Practice delineating the consent orde r procedure, by omitting vital elements of the Commission's actual operations which are either unau-g thorized or unlawful, violate the notice requirement of Sec-j tion 3(a) of the Administrative Procedure Act, as well as i
the Freedom of Information Act. Secondly, respondent al-leges that it has been denied administ rative due process on l
r the ground that it was not apprised of, andhad no opportun-t m, _ _ _
p ity to meet, the ex parte representations of the ataff to the l
Commission in the course of the consent order procedure prior to the issuance of complaint. As a result, respondent k
argues, it was denied a fair hearing and effective represen-i tation by counsel. Thi rdly, respondent argues the invalid-l ity of the Commis sion's consent orde r procedure is confirmed i
by the Freedom of Information Act of 1966.
r 2
Respondent's motion to vacate the complaint presents two threshold questions: First, dothe Commission's Rules comply with the notice requirement of Section 3(a) of the Ad-ministrative Procedure Act and, secondly, are the Commis-l sion's consent order procedures, prior to the issuance of i
complaint.
- adjudication" as that term is defined by that t
statute ? Or, are consent settlement procedures, at this stage of the proceeding, as the Rules contemplate, simply l
A an exercise of this agency's administ rative function where I
ex parte contact with the staff is appropriate and even de-s t rable ?
g:
[3a. I, 3a.3, Sb.1, Sc. 2] We first turn to the question of whether the Commission's Rules of Practice comply with j
the notice requirements of Section 3(a) of the Administrative t
Procedure Act.
Respondent's contentions on the question of whether it had an adequate hearing and whether the con-f sent order procedures permit improper commingling of the prosecutorial and adjudicative functions will be considered y{
in connection with the issue of whethe r precomplaint consent 4
settlement procedures a re prope rly administ rative or adju-q :
dicative functions.
1/ [ Footnote f rom preceding page}.
Re sponde nt, in a separate motion to the Commission, opposed by complaint counsel, requests leave to file a brief and present oral argument in support of its mo-i 6
? f tion to vacate the complaint. Seeburg subsequently re-w t
I quested the Commission to consolidate the motion to
. [
vacate the complaint with the Examine r's ce rtification E
of respondent's motion for the production oi ce rtain doc-i
~
uments f rom the Commission's files for briefing and l
y oral a rgument.
r
. 3
.s.
LV I
l w adrxs y-
'/.
2 2
a
(
w 20 AdL2d DscIstons 607 \\- I Respondent contends that Section 3 of the Administra-y. tive Procedure Act has been violated by the failure of the l 9~ Commission's Rule s to authorize the participation or to de-fine the role of the Bureau of Restraint of Trade in the con-f- ff + sent order procedure. In this connection Seeburg contends: 7p.. ... the Commission's present Rules specif-h *' ically pinpoint exclusive responsibility for con-l '** sent negotiations with the Division of Consent a" Orders, which has no connection with investiga- {'* tion or litigation, as contrasted with staff coun-sel assigned to the Bureau of Restraint of Trade, z who a re inhe rently adversary advocates predis-i _ ?". ' posed against a proposed respondent whose con-s][, duct they have investigated with an eye toward Q,, litigation." %ee Respondent's reliance on Section 3(a) of the Administ ra-g,,,, tivecProcedure Act, whose text is set forth in the margin, 2/ m J.' is misplaced. A reading of $$2.1-2. 4 of the Commission's y,, Rules and its Statement of Organization makes it clear that k,.s they adequately delineate the consent orde r procedure actu- =h.., ally followed and authorized the participation of the Bureau of Restraint of Trade in that process. $M r Mw In this connection, the Statement of Organization sets E. forth the functions of the Division of Consent Orders as b. follows: pm., c}= " Division of Consent Orders. - This office sup- [ ervises the preparation and execution of agree-ments submitted to the Commission for settlement t u? _D " ' of cases by the entry of consent orde rs." (Emphasis ?. ". supplied.) a-)' The term " supervise" to describe the duties of the Division of Consent Orders is utilized for a purpose, namely, to in-I C(* form respondent and all others to whom the consent order Pe T.h. -2/ "(a) Rule s. - Eve ry agency shall separately state and jd: currently publish in the Federal Register (1) descrip-tions of its central and field organization including del-y., egations by the agency of final authority andthe estab-s, lished places at which, and methods whereby, the public $jh. may secure information or make submittals or requests; (2) statements of the general cou-se and methodby which '?,' ' i its functions are channeled and dete rmined. including k-the nature and requirements of all formal or informal ?g * '- procedures available as well as forms and instructions 4 as to the scope and contents of all papers, reports, or it((* cxaminations; and (3) substantive rules adopted as au-n thorized by law and statements of general policy or in- ?b terpreta.tlons formulated and adopted by the agency for Fy. Y.5 (Footnote continued on following page].' - r:,~ m. 3 "A l C
l l 608 PIKE AND FISCllElt. ADbilNISTRATIVE LAW (2d) \\ I-procedure apnlies that it is the duty of the staff members of I this Division to oversee the preparation of agreements look- )( ing toward consent settlement by respondent and employees l l on the Commission's staff outside the Consent Order Divi-I sion. The fact that the Statement of Organization does not i L specifically name the Bureau of Restraint of Trade, as such, l h is immaterial. Obviously, the Rules contemplate, in any t case, that a proposed respondent desiring to settle a pro-l ceeding shall negotiate under the consent settlement proce-i dure with those staff membe rs primarily responsible forthe l case (in this case, attorneys belonging to the Bureau of Re-st raint of Trade), under the supervision of the Division of I Consent Orde rs. Read together, $ $2.1-2. 4 of the Rule s and the Statement of Organization clea rly authorize, in the con-sent settlement process, pa rticipation by the Bureau of Re-st raint of Trade or othe r staff personnel engaged in the investigation or prosecution of the case. E In short, it is clea r that the Rules and the Statement of .[ Organization put respondents on notice that personnel from 6 E the Division of Consent Orders are not alene involved in the I i precomplaint consent order procedure. The Rules alsomake it clear that the final authority for deciding on whether prof-l 5 p fered consent agreements should be accepted rests with the Commission itself. Accordingly, the Rules comply with the I requirements of Section 3(a) that procedural rules shall de-sc ribe the organization of the agency as well as the general J course and methods by which functions are channeled and whe re final authority rests with respect to particular func-tions - in this case, the consent orde r procedure. Section 3(a) does not require that an agency's procedures be set is forth in every detail but merely that they be " realistically l ( informative to the public" 3) so that it can intelligently take l 5 advantage of the formal and informal procedures of an agen-l ~ cy, which a re available. That it was the legislative intent to set up a standard of realistic information rather than to require the recitation of I all the details attendant upon an agency's procedures is evi-l dent from the legislative history. In that connection, the Senate Judicia ry Committe print of June 1945, commenting l on agency objections to the proposed notice requirements under the APA, specifically stated that if such objections i were grountled on the difficulty of stating the procedures in r
- 2) [ Footnote continued f rom preceding page).
i I (, the guidance of the public, but not rules addressed to and served upon named persons in accordance with law. I No person shall in any manner be required to resort to I organization or procedure not so published."
- 3) See Attorney Gene ral's Manual on the Administrative l
Procedure Act (1947), p. 21. 2 %'m M.,V nn. s W q k him A
~ -f . '}.;, 5: Q 20 AdL21 DECISIONS 609 i -m-M' detail, the answe r to such objections was that the contem-l MiV* plated provtsion required only a statemer.t of the general MA* course and method of agency procedure. 4_/ _b 'N Fu rthe rm o re, even li it we re conceded, for the sake of Nf' a rgu me nt, that Part II of the Commission Rules and the Statement of Organization do not sufficiently apprise respond-7S-ent of the particulars of the Bureauof Restraint of Trade's ha role in the consent settlement procedure, it is clear on the -5 facts of this record that respondent, as soon as it initiated i Kk,., the settlement procedure, had actual notice of the Bureau's l role in the precomplaint settlement proceedings. As re-Kr-spondent itself states in the memorandum in support of its k motion to vacate, of July 15, 1966: i y [,
- All negotiations with representatives of the Com-i;r mission were held at the offices of the Chief of the A';'
Division of Merge rs of the Bureau of Restraint of
- T ra de.
Attending the negotiations we re the Chief W W of the Division. Division staff counsel, a member i' .IM of the Divis'on of Consent Orders, as well as coun- ?.'.4 set for the respondent. These discussions explored i N not only respondent's position, but also alluded to l ( g/ the recommendations ultimately te be made to the j Q Commission by the staff." S/ 6 ,f In short, it is apparent from respondent's own statements K.4 that it clearly knew f rom the inception of the consent settle- -ps ment proceedings that it would be dealing and negotiating Q [;. yg, with personnel of the Bureau of Restraint of Trade and that personnel of that Bureau would make recommendations to r =5T(.,'L. the Commission with respect to the consent settlement pro-g/,t,.- ceedings. Fu rthe rmo re, respondent knew, from $$ 3. Z and 4,,
- 3. 3 of the Commission's Rules of Practice, that an adjudi-l
=k cative proceeding in this agency commences only with the i[p. issuance and se rvice of a complaint by the Commission. I M? a. Accordingly, respondent was put on notice by the express l Mfc;" - wording of the Rule s that the precomplaint settlement p ro-4 %Q cedures are considered by the Commission to be in the [ h$ stage preceding the adjudicative phase of the proceeding j fj and therefore one in which ex parte contact with the staffis l gg( proper. In short, f rom the beginning of the procedure, N Seeburg knew (1) that the Bureau of Rest raint of Trade was to participate in the proceeding, (2) that the staff would of-hgff-fer comments on respondent's proposals tothe Commission, .h l I
- L*,
y.h-
- 4) S Doc No 248, 79th Cong 2d Sess 16 (1946).
l e i. -5/ Furthe rmore, the Commis sion's " A" and
- B" lette rs, y
W respectively notifying respondent of the intent to is- -T - sue complaint and replying to respondent's answer in-M1in dicating an inte rest in the consent settlement procedu re, g@y,[ routinely identify counsel responsible for the trial of
- N:Y the case. (See Appendices A and D. )
Wl. - Nkky 1-m.w. I
i I; 610 PIKE AND F scist.n, A1)MINISTRATIVE law (2d) 2 } and (3) that unde r the Commission's Rules the precomplaint settlement procedures we re ex pa rte, nonadjudicative pro-b ceeding s. Knowing all this, respondent nevertheless elec-ted to proceed and only when the case was not settled to its liking did Seeburg choose to attack the Commission's con-sent settlement procedures under Part 11 of the Rules as conflicting with the Administ rative Procedure Act and the requirements of administ rative due process. Accordingly, respondent's challenge to the Rules in this instance must ? clearly fall in any case, since it had actual notice of the L ve ry facts which it claims we re inadequately published. See United States v. Aa rons, 310 F2d 341, 347-8 (2d Cir 1962). In that case the court explained that the sanction in Section 3(a) for nonpublication does not apply where actual know-ledge exists. Const ruing the Cong ressional intention on this point the court cited a memorandum of the Department of Justice put into the record on the floor of the flouse dur-ing the conside ration of this law. This interpretation of the section is pe rtinent he re. f "Section 3(a) provides that the re shall be publi-cation in the Fede ral Register of the rules of the various agencies of the Government. The last sentence of Section 3(a) states:
- no persons shall in any manner be required to resort to organiza-tion or procedure not so published.' But this does not mean that a pe rson who has actual notice is not required to resort to agency organization or procedures if it has not been published in the Fed-eral Registe r.
If a person has actual notice of a rule, he is bound by it. The only purpose of the requirement for publication in the Federal Regis-ter is to make sure that pe rsons may find the necessary rules as to organization and procedure if they seek them. It goes without saying that ac-4 tual notice is the best of all notices. At most, M the Fede ral Register gives const ructive notice. Sec 44 USC $ 307. " (footnote omitted. ) 310 F2d at 34 8. 6 / Fu rthe rm o re, the challenge to the Commission's com-plaint in reliance on the notice provisions of Section 3(a)of -( the Administrative Procedure Act is clearly inappropriate unde r any circumstances. The only penalty in the statute + u for the failure to make notification pursuant to its provi-j [; sions is to excuse compliance by outside rs with the requi-site procedu re. First National Bank of Smithfield v. Saxon, 4 352 F2d 267, 273 (4th Cir 1965). See also Kessler v. FCC, i 326 F2d, supra note 6, at 690. Obviously, the penalty pro-visions in Section 3(a) give respondent no standing to sue for dismissal of the complaint on the grounds relied upon in this instance. I lJ. l
- 6) See also Kessler v.
FCC, 326 F2d '.73, 690 (DC Cir 1963). .f.c4 gj l&w i ,5
- .H?Q g a
w [. l 20 AdL 2d DECISIONS 611 1 (2d. 2, 5.1, Sb. 2, Sc. 2, 6a. 2, 7c.13, 8.1] The re solu-p., tion of respondent's contention that the Commission's con-p,, w, sent order procedures are contrary to the Administrative $e Procedure Act and constitute a denial of administrative due process because they deny Seebu rg a hearing and effective l representation of counsel depends prima rily on the validity of its assertion that consent order procedures are "r djudi-I y, cation" within the meaning of that term as it is used in the i -4 Administrative Procedure Act. Essentially, respondent ar-y,= gues in this connection that the consent settlement proce-dures come within the definition of " adjudication"as agency H process for the formulation of an order" set forthin Section i 2(d) of the Administ rative Procedure Act. The same sec- ,W tion of the statute defines an order as "the whole or any pa rt N' of the final disposition. of any agency proceeding inany matter other than rule rnaking." In addition, respondent re-lies on the fact that Section 5(b) of the Administrative Pro-4 '" cedure Act, which provides for informal settlement of cases 6 otherwise to be decided on a hearing and record, is includ- ,E ed in that section of the statute dealing with" Adjudication". The short answer is that the Commission has already '.I conside red and rejected essentially the same contentionsin William II. Rore r, Inc., Docket No 8599. The Commission, ..5 in its interlocutory order of March 5, 1964, in that case, rul-ing on almost the identical a rgument, stated: Nothing in the Administrative Procedure N f'r Act or in the basic principles of fair procedure precludes the Commission from creating and A following a procedure for settling disputes rith- ? out recourse to adjudication. Consent negotla- [b, tions are not a stage in adjudication but a means of establishing whether adjudication can be avoid- ). ed altogethe r. Like investigations, consent nego-tlations are distinct f rom the adjudicative process 4 and hence not gove rned by the standards which con-trol adjudicative procedure." 7 / h' e,..a The definition of " adjudication" set forthin Section 2(d) . f. 3 of the APA, on which respondent relies, simply does not yt. apply to consent settlement negotiations prior to the issu- ' Z. ance of complaint. The consent orde r procedure, which follows the notification to respondent that this agency con-templates a proposed adjudicative proceeding, is not a final P-disposition in any sense. If the proposed respondent elects to do nothing upon such notification or if negc,tiations are fej,* unsuccessful, no disposition of any kind is, or canbe, msde. Q +N 7/ On May 13, 1964, the United States District Court for w the District of Columbia, in Civil Action No 644-64, A,, Federal Trade Commission, j; William H. Itore r, Inc. v. dismissed Rorer's motion for preliminary injunction (/ and summary judgment, which involved this issue, . I.. among others. y'
- n..
g. 4 .t ?,
- 1 a
r l ? II 6}2 PIKE AND FiscHER, ADMINISTRATIVE LAW (2d) In such an eventuality. the complaint is issued and served: + only then can final disposition be made after trial or upon default. In no case is there an order or final disposition made until after the issuance and service of the complaint ~ and afte r full opportunity for hearing. Accordingly, since there is no final disposition prior to the issuance and serv-ice of complaint, there is no adjudication within the mean-ing of the Administrative Procedure Act. If a final di.spo-sition does result from consent order negotiations, it does I so only upon respondent's consent. In such cases, the con-sent agreements customa rily contain language wherein pro-t posed respondent waives any further procedural steps and consents to the issuance of complaint and final orderwith- =- 7 out further notice. Without such waiver and consent there i can be no final disposition of any proceeding pursuant to the consent order procedures. The Commiseson's position on this question is in ac- .cordance with the terms of Section 5(b) of the Administra-j tive Procedure Act, which provides for settlement of disputes by consent. This section provides: ? - Se c 5. In eve ry case of adjudication required r by statute to be determined on the record after opportunity for an agency hearing,... t a(b) Procedure. - The agency shall afford all g interested parties opportunity for (1) the sub-mission and consideration of facts, a rguments, offe rs of settlement, or proposals of adjust-ment whe re time, the nature of the proceeding, and the public inte rest permit, and (2) to the extent that the parties are unable so to deter-mine any controversy by consent, hearing, and decision upon notice and in conformity with Sec-f. f tions 7 and 8." %5 In short, Section 5(L) provides that administrative agencies shall afford opportunities for informal settlement and that the hearing procedures specified by the Act in cases where l consent settlement procedures have begun, apply only to i the extent that the cases are not settled in this manner. Accordingly, the statute sar,etions informal procedures for ( settling cases in order to avoid the complexities of adjudi-ca t io n. 6 This construction of the plain meaning of the statute is supported by a reading of the legislative history. In this connection, the House Report on the bill expressly states, y with respect to Section 5(b), that whe re settlements do not M I dispose of the whole case, Sections 7 and 8, as well as Sec- } tion 5(c), apply. 8,/ Significantly, in thelight of respondent's 8/ HR Rep No 1980, 79th Cong, 2d Sess (1946); S Doc 248, supra note 4, at 262. VN.* 's
- f
) MMM(3 -.a
--, u 20 AdL 2d DEc:slons 613 arguments implying that the Commission's ex parte contact N.. with the staff was improper in this instance Section5(c) pro-as vides for the separation of functions in adjudicative hearings. Accordingly, the conclusion is ine scapable, both f rom the se - text of the Act, the statutory scheme and the legislative his-
- +-
tory, that consent settlement procedu res under Section p* - 5(b)(1) of the Administrative Procedure Act are properly ex d**- pa rte. There is no right to a hearing except to the extent 7*** that the matter cannot be settled by the informal settlement p*- procedures provided by the agency. 9/ pe 7 ~' In effect, re s ponde nt, in its motion, concedes that the D '* requirements for hearings spelled out in Sections 5(c), 7 and 8 of the Administrative Procedure Act do not apply to s'' consent settlement procedures. Neve rthele s s, respondent -f claims it has been denied due process because it did not get 0 a hearing, although it does not spell out with any degree of precision the ground rules under which such a hearing should --Y_( * be conducted.10/ In this connection, respondent is obvious-r ly not entitled to intra-agency comment on its settlement L proposals on the ground that this is necessary to afford it a fair hearing since neither the Commission's Rules nor the -+ N Administrative Procedure Act, with which those Rules must comply, require a hearing in precomplaint settlement pro-i c edu re s. 4 -k 9/ The fact that the Congress did not intend to require trial-like proceedings under the settlement procedures j authorized by Section 5(b)(1) of the Administrative Pro-7 cedure Act is made clear by the Senate Judiciary Com-mittee print of June 1945 on the legislative history of the Administrative Procedure Act, which states, in j. pertinent part: _-_ r ? = .. The statutory recognition of such informal meth-ods should both strengthen the administrative arm and K serve to advise private parties that they may legitimate-2 -"p,. _, ly attempt to dispose of cases at least in part through confe rences, agreements, or stipulations. It should p be noted that the precise nature of informal procedures li is left to development by the agencies themselves. " S Doc 248, supra note 4, at 24. _y a... p., 10/ In this connection, respondent states: 5 "And while the detailed hearing requirements in Sec-6'% tions 7 and 8 of the Administrative Procedure Act may be inappropriate to the Commission's consent orde r '{*** practice, the essentials of due process presupposing + 4 fair and impartial procedures are still required for {,[ *A such
- adjudication,' whe re substantial rights of proposed 5_
9 respondents are vitally affected.... " (Memorandum g in support of motion, p.17. ) In connectionwithits con-y4 tention that ex parte comments by the staff on settlement proposals are improper, respondent does not apparently g rely directly on Section 5(c). (Id at 19). y?. C
- C e
s
l F I 614 PIKE AND FISCllER, ADSIINISTRATIVE LAW (2d) ( [3c. 3 Sb.1, Sh. 2. 6a. 2, 7c.13, 8b. 7} A related ques-tion in this connection is: Is respondent entitled, as it claims, l { to intra-agency memoranda to the Commission commenting L e on the consent negotiations prior to complaint, on the ground I that withholding such documents would deprive it of effective L representation of counsel ? Re s pondent, of course, has the right to be represented by counsel. It is obvious, howeve r, that the degree to which counsel may participate in repre-l senting a client before the Commission will, of course, vary with the nature of the proceeding. The real issue involved he re is whether the Commission may informally consultwith its staff as to whether a complaint should issue once consent settlement procedures have begun. Respondent's counsel should not be permitted to inject himself into that procedure r unde r the guise of rebutting staff representations with re-spect to the settlement proceedings. The requirements of Section 6(a) providing for representation by counsel in ad-1 ministrative proceedings do not go that far. Nor does Sec-tion 6(a) of the Administrative Procedure Act go so far as f to permit respondent to, in effect, secure, by way of dis-covery, internal communications bearing on the questionof whether complaint should issue, irrespective of whetherthe l proceeding is in the adjudicative stage or not. The net effect of respondent's argument is that administrative due process a requires that the informal settlement procedures should be l converted into a preliminary trial on the Commission's de-cision to issue complaint. Neither the Administ rative Pro-5 cedure Act nor any other legislation warrants such a proce-dure. Respondent's rights will be fully protected in the adjudicative stage of this proceeding, which is subject toall the safeguards provided by the Administrative Procedure f Act. Furthermore, the Commission's decision on whether to issue complaint is within its discretion. Pre se rvation oi the integrity of the administrative process precludes an in-quiry into this agency's mental processes leading up to that decision. I1/ (3a.1, 5b.1] Finally, respondent contends that the Com-f mission's consent order procedures violate the lette r and spirit of the Freedom of Information Act of 1966. Although that statute does not, as a technical matter, come into effect until July of 1967, respondent's arguments thereunder will g be conside red since the Commission desires to bring its procedures into line with the requirements of this Act as quickly as possible. Re s ponde nt, under this statute, also E i [ 1,1) Grabe r Manufactu ring Company, Inc. (Order Ruling on p Questions Certified by the Examiner and Respondents
- Appeal f rom Hearing Examine r's Huling, Decembe r 13, 1965), Docket No 8038; R. H. Macy & Co., Inc. (Order w
Ruling on Questions Certified and Denying Motion to Strike Ce rtification, Septembe r 30, 1965). Docket No 8650. Cf. Modern Marketing Service, Inc. (Order Rul- [ ing on Question Certified, January 7,1966) Docket No 3783. __,J ' p'=s { ~- M% M swW92% 1
i 1 20 AdL2d DF.CISIONs 615
- tad quas-asserts that the rules relating to the Commission's consent
] . s it claims, order procedures do not adequately give notice of the nature amenting of the staff participation in the consent sett!' ment proce-ac g round dures, that they fail to establish criteria fo'. opportunity to f effective make oral presentations to the Commission,12/ and that has the they fall to give notice that the Commission m7y rely on ex ,mwe ve r, parte representations by the staff. As stated above, it is repre-the Commission's view that the consent order rules satisfy irse, va ry the notice requirements of Section 3(a) of the Administrative involved Procedure Act now in effect. It is further our view that the = nsult with provisions of Section 3(a), as amended by the Freedom ofIn- 'e consent formation Act, are not markedly different from the require-ounsel ments of the statute prior to its amendment. As the Senate ,rocedu re Report on the bill 13/ states, this subsection has fewer 'ith re-changes from exisWng law than any other, primarilybecause tents of there have been few complaints about omission f romthe Fed-
- l in ad-eral Register of necessary official mate rial and that the com-oes Sec-plaints that have.been received have been more directed to 1 fa r as allegations that there has been too much publication rather c'f dis-than too little. According to the Senate Report, a number astion of of minor changes have been made in the section to make it more clear that the purpose of inclusion of material in the sthe r the a
net effect Federal Register is to guide the public in determiningwhere ' Process and by whom decisions are made, as well as where theymay nould be secure information and make submittals and requests." Ac- ' 8"' 8 'le - cordingly, under the Freedom of Information Act, as before, !!ve l'ro-the standard by which procedural rules must be judged is 'a prnee-whether they are realistically informative to the public of jn th" the administrative procedures available. The Commission's tectt.iali consent order rules for the reasons heretofore stated meet I8 d f" that teat.
- whethe r
[a a n""i n - (3c. 3, 5b.1, 7c.13, 8b. 7) Seeburg also apparently re-dh "I lies on the Freedom of Information Act as support for its -p to that contention that it is entitled to intra-agency memoranda com-menting on its settlement proposals to the Commission. These, however, are internal communications relating to 1, t h C""" an administrative matter and clearly are within the exemp- ""I tions set forth under Section (e) of the Act, which states in i $.t..).f,'.)., pertinent part: J er 2,33
- (e) Exemptions. - The provisions of this section N...
shall not be applicable to matters that are... At
- o.. l..,
12/ Oral presentation to the Commission in the course of a consent procedures has only been granted under unusu- ~ Y al circumstances when in the Commission's belief such blie,r.,n presentation se rved ti.e public interest. If the consent
- bo..
settlement proceedings are to remain the flexible, in-
- f **=, I t, formal procedures they are intended to be, the decision
< h.., on whether to grant permission for such presentation
- Mt, must remain within the Commission's discretion.
'% N. Ne' " 4 13/ S Rep No 813 89th Cong,1st Sess 6 (1965). l 4* e tt 4 e
f 616 PIKE AND F scitER. ADMINISTRATIVT. LAW (2d) { (5) inter-agency or intra-agency memorandums f or letters which would not be available by law l t, ll to a private pa rty in litigationwith the agency...." l I[ As already noted, the Commission's precomplaint consent orde r procedures are properly ex parte and not in the cate-r ll gory of adjudication. The Freedom of Information Act, of course, has no bearing whatsoever on the issue of whether l[ the Commission's precomplaint consent order procedures l are properly ex parte or not. The only question remaining j y is whether the staff memoranda commenting on respondent's consent settlement offers are properly within Exemption No 5 to the provisions of the Act. We hold that the documents in question come squarely within the scope of this exemption. i f The Act does not enlarge the discovery rights of a private party engaged in litigation with the Commission to secure l L documents of this nature which have hitherto never been 3 conside red as subject to discovery in this agency's pro-ceedings. i The fact that Cong ress did not intend to enlarge discov-ery rights to encompass internal agency memoranda bear-i ing on the question of whethe r the agency should issue com-plaint is supported by those passages in the House and Senate l reports commenting on Exemption No 5 of the Act. In this connection, the Senate Report states: i i ( " Exemption No 5 relates to
- inter-agency or int ra-agency memorandums or letters which would not be available by law to a private party in litigation with the agency.' It was pointed out in the com-ments of many of the agencies that it would be im-possible to have any frank discussion of legal or i
j policy matters in writing if all such writings were to be subjected to public scrutiny. It was argued. and with me rit, that efficiency of Government l-would be greatly hampered if, with respect toleg- ) al and policy matters, all Government agencies I were prematurely forced to ' operate in a fish-b owl. ' The committee is convinced of the merits of this general proposition, but it has attempted to delimit the exception as narrowly as consistent with efficient Gove rnment ope ration." (S Rep No [ 813, 89th Cong. 1st Sess 9 (1965). t The IIouse Report makes it equally clear that the Act [ was not intended to enlarge the litigant's discovery rights to documents of this nature. It, too, recognizes the mer-it in the objections of agency witnesses that a complete ex-s change of opinions within agencies would lie impossible if all internal communications were made public, and that " advice f rom staff assistants and the exchange of ideas L W e among agency pe rsonnel would not be completely f rank if they we re forced to ' ope rate in a fishbowl. *" The report [ W concludes its consideration of this point with the following significant interpretation of this exemotion, which is pertinent he re: .I
- .q
) I A-m __e. m.. m -~
20 AdL2d DEC18 tons 617 3 = .. This clause is intended to exempt from dis-closure this and other information and records whe rever necessa ry without, at the same tisme, permitting indiscriminate administrative secrecy. p onssnt S 1160 exempts from disclosure material 'which ihs cate* would not be available bylawtoa private party in Act, of litigation with the agency.' Thus, any internal shsthar memorandums which would routinely be disclosed edures to a private party through the discovery process maining in litigation with the agency would be available to Pondent's the general public." HR Rep No 1497. 89th Cong, LPtion No 2d Sess 10 (1966). (Emphasis supplied. ) tuma nt s Mmption. As the Assistant Attorney General of the Department of private Justice's Office of Legal Counsel stated: "If an internal re-secure port, proposal, analysis, or recommendationis tobe worth bsen reading, it must be a fre'e expression and not confined to Pro-matters ' cleared for publication. ' This is as true in Gov-ernment as it is in any other organization." 14 / That reason-ing is applicable in full measure to the "Ecuments which e discov-respondent claims should have been produced in the course !a bear-of the precomplaint settlement procedures. aus c om - nd Senate The final matter remaining for decision is the question-In this of whether respondent should be granted leave to file briefs and present oral argument in support of its motionto vacate complaint and whether that certification should be consoli- {'[*
- dated with the certification of Seeburg's motion for produc-tion of documents for the scheduling of briefs and oral a rgume nt.
The Commission has carefully examined the pleadings filed before the Hearing Examiner in connection I** with respondent's motion to vacate as well as respondent's subsequent request directly addressed to it, and complaint counsel's answe r in opposition the reto. As a result of such is d. review, the Commission is of the opinion that on the basis of the pleadings now in this record it has sufficient informa- "E' tion on the respective positions of both respondent and com-plaint counsel on the issues raised by the motion to vacate - the complaint, and that this matter should be decided with- , 8 out further delay. The Commissioni therefore, has deter- ~ mined that respondent's motion to vacate the complaint, it s request for leave to file briefs and present oral argument. ' "I and the request that the two certifications of respondent's j motion be consolidated for briefs and oral arguments should be denied. An order to this effect will issue. ,he w l right s l to mer-ilste ex.. inble if 3/ Statement of Norbert A. Schlel. Assistant Attorney de a W General Office of Legal Counsen. Department of Jus- .ank if tice; Hearings Before the Subcommittee on Administra- .,,,fr.hnt tive Practice and Procedure of the Senate Committee 33 "E' " " " # "'Y (1963). l ~
r i j r 618 Pl!<E AND Fiscura. ADMINISTRATIVE LAW (2d) t L b Appendix A l i You are hereby notified that the Commission has deter-mined to institute a formal proceeding in the above captioned !{ matt e r. A copy of the complaint which the Commission in-tends to issue, together with a proposed form of order, is enclosed. E As provided in the Commission's Rules. Pa rt 2 - Consent Order Procedure, you may, w'. thin ten days after the service of this notice, notify the Sec retary as towhether or not you are interested in having the proceeding disposed of by the entry of a consent order. If your reply is in the m negative, or if no reply is filed within the time provided, the complaint will be issued and served forthwith and there-e af te r adjudicated in regula r cou rse. If your reply is in the affirmative, the files will be refe r red to the Division oiCon-sent Orders for furthe r handling in accordance with estab-lished p rocedtire. After the complaint has been issued, the consent order procedure provided for by Part 2 of the Rules will not be available. Counsel for the Commission in this matte r is By direction of the Commission. Appendix B i The proposed respondent (s) having filed reply on indicating interest in having this matter disposed of by the entry of a consent order, the files he rein have been referred to the Division of Consent Orde rs. The Commission's Rules gove rning consent order pro-cedure provide for the submission to the Commission of an agreement containing a consent order within thirty days af-te r the filing of such a reply. Counsel for the Commission will communicate with you with respect to securing the agreement. l L SEEBURG CORP. M Fede ral T rade Commission. Oc t obe r 25. 1966 Docket No. 8682 w 7c.13(7) Right to disclosure of confidential data in possession of agency. A showing of good cause for the production of i confidential data f rom the Commission's files re-quires a demonstration of real or actual need A l l, w& hI rCU[I
w 20 AdL2d DEclSIONS 619 showing of generalized relevance or possible help-fulness is not enough. Production of cordidential data relating to customers of the industry andcom-iption d Petitors of respondent (concerning marketing stra-nion in. tegies, as well as technical, marketing and pur- '.dc r. is chasing experiences and plans) will be denied where it is not shown that the data requested are unavailable to respondent under procedures to secure the data directly from the source rather 4 citer than f rom the Commission's confidential files. "whethe r Furthermore, as to some of the data requested, -isposed relevance to the issues in the case was merely ' in the C 0 "3
- C '" '"I-
,ided. . d there-7c.13(7) (3a. 3, 7b. 8, 7b. I1] Authority of Exam-a in the Ine r to rule on request f or disclosure of confiden"- .n of Con-tial data in possession of agency. estab-urd,the Contention that the Examiner has the authority he I(ute s to order the production of confidential information ' rom the Commission's files without reference to the Commission, under the exception relating to documents whose "use may become necessary in connection with adjudicative proceedings. " is re-jected. The exception includes that whichcomplaint counsel must use in the presentation of his case and other vital documents such as Jencks type statements. it is not a general authorization for pretrial dis-on covery bypassing the Commission's requirements , having in the pertinent rule governing the release of con-ler.the fidential data. This is a reasonable construction -onsent of the Commission's rules when read together. The contention that such a construction compels respondent to resort to a procedure not published ler pro. is without merit. . ion of an days af. 7c.13(7) (6a. 2(2), 7a. 2, 7c.14(1), 12. 2] Right to disclosure of confidential data in possession of agency.
- with you Contention that refusal of the Commission to disclose confidential information in its files, ab-sent a showing of necessity, violates Section 6(a) of the AdmiGstrative Procedure Act (in that re-spondent would be deprived of its right to repre-t
sentation by counsel if complaint counsel were accorded a preferred position in their discovery and pret rial prepa ration), Section 7(a) (in that the requirement that adjudicative proceedings be conducted in an impartial manner would be f rus-f trated), and Section 12's guarantee that all re-g g quirements or privileges relating to evidence . ~. and procedures shall apply equally to agencies .. f and pe rsons, is rejected. Respondent may ob-tain the information sought at some future time If a showing of. necessity is made. e h
f I i l 620 PIKE AND Fascitta. AtutiN:sTaAT:vz LAW (2d) i I l; l 7c.13(7) ( 3c. 3( 1)] Right to disclosure of confi- [ ( dential data in possession of agency. L The Freedom of Information Act does not in- [ r dicate that the Commission should abandon the A [! proceedings involving application for confidential [ standard of necessity in the case of discovery I T documents f rom the Commission's files. In fact, i ' e[ the provisions of the Act indicate the cont rary. ( The Act does not concern itself with discovery L g procedures applicable to adjudicative proceedings, i 1 d 1 l r but rathe r with enlarging the access of the public j and clarifying the right of the public to documents i in administ rative files. Ilowever. Section 3(e)(4) i l i exempts f rom the provisions of the Act trade se-crets and comme rcial or financial information ob-tained f rom any persons and privileged or confi-dential, and Section 3(c',(,) exempts investigatory ~ files compiled for law :nforcement except to the extent available by law to a private party. i I I (Rulir.g on respondent's motion for production of docu- [ ment s]. l ? BY THE COMMISSION. (Commissioner ELMAN con- { curring in the result). This matter is before the Commis-j sion on the Hearing Examiner's certification of respondent's l l motion for production of Commission documents pursuant to 6 $3.1I of the Commission's Rules, with a recommendation that it be denied. The motion was certified to the Commis-sicn on the ground that the request should be treated as an [ f application for confidential information f rem the Commis-ston's files under $ 1.134 of the Rules. It should be noted at the outset that respondent has apparently had full disclo-sure of complaint counsel's case, both with respect to the witnesses to be utilized, the documents to be introduced, i the underlying data supporting such exhibits, and the theory 'ae of the case. There is evidently no suggestion that complaint l f counsel will, in his presentation of the case, rely on the 1 data included in the specifications of respondent's motion l I for production now under consideration. E in issue before the Commission, according to the Ex-aminer's certification, are the following documents speci-ficd in respondent's motion for production: I 3. Any documents showing the amount and manner of sales of bottle and can vending machines to the following ) s . J l' listed classes of bottlers, including, but not limited to, any f special policies, problems, and selling or other techniques f h applicable to such classes of bottlers: W a. Bottle rs of Coca-Cola, whethe r independent or owned by the Coca-Cola Company; I b. Bottle rs of Pepsi-Cola, whether independent '{ y or owned by Pepsi-Cola Co., Inc.; 1 y
- n
{ l AW'1' t
y ^ n 20 AdL2d DEczSIONS 621 )' ?.i.
- c. Bottle rs of Royal Crown Cola, whethe r inde-7 pendent or owned by the Royal Crown Cola Comp.s ny; U*
y d. Bottle rs of Seven-Up, whethe r independent f, or owned by Seven-Up syrup manufacturers; ill41 (ett. e. Bottle rs of Dr. Peppe r, whether independent /> or owned by the Dr. Peppe r Company; F4 *. f. Bottlers of Canada Dry, whether independent Ft' or owned by the Canada Dry Corporation; lent
- D(8 7
- g.
Bottle rs of othe r soft d rinks, whethe r inde-pendent or owned by soft drink syrup manufac-tu re rs. snf4-Oh 4. Any documents which are, or which mention, refe r, b relate to, or show cor respondence, reports of meetings, h meetings, negotiations, enginee ring tests, or other contacts / between manufacturer of vending machines and any manufac-rCI turer of soft drink syrup in connection with the approval or q acceptance of the vending machine manufacturer *s products for sale to bottlers of soft drinks. MN. 9 "' ' ' ' ' ' 5. Any documents obtained from any manufacturer of PP" "t's soft drink syrup, including, but not limited to, the firms . N listed in specifications 3(a)-(f), which are, or which mention, M ' '.'. a'.. refe r, relate to, or show: h C. n b' Laboratory or engineering procedures used by a. j ( ", [',' any such manufacture r in the testing or acceptance i of bottle or can vending machines; 1 *:.. .33 '[,
- b.
Laboratory, enginee ring or other reports (in-cluding summaries thereof) on the testing or accep-tance of bottle or can vending machines by such h '.,',. } "* ma nufact u re r s; c. Negotiations, meetings, correspondence, or any other contacts between such soft drink syrup manufacturer and any manufacturer of bottle or , p n, j o,.,,' ', can vending machines with respect to the testing i or acceptance of said vending machine manufactur-er's machines by said soft drink syrup manufacture r; i Iis.. t.,, d. Modification and/or resubmission of vending machines by bottle or can vending machines manu- ..g. - facturers to overcome enginee ring or technical .s. problems or objections raised by soft drink syrup w ma nu fac tu re r s; Technical problems encounte red in actual op-p# e. f eration of bottle or can vending machines; y..s,e f. Lists of bott!c or can vending machines ap-proved or acceptedby any manufacturer of soft drink k [.
i I I 622 PINE AND Fiscittn. ADillN!5TRATIVE LAW (2d) (. syrup for sale or recommendation for sale to i its owned, controlled, or contract bottlers; g. Purchase volume of bottle or can vending machines, including particular types and mod-els thereof, by soft drink syrup manufacturers and/or soft drink bottle rs, f rom particula r sup-plie rs; h. Any special promotional incentives, offered by soft drink syrup manufacturers in connection with the purchase of bottle or can vending machine equipment by soft drink bottle rs. 6. Any documents obtained f rom any bottler of soft j drinks, whether independent or company owned, or f rom any association of soft drink bottlers, which are, or which mention, ref e r, relate to, or show: a. Purchase volume of bottle or can vending ma-chines, including particula r types and models jl. the reof, f rom pa rticular supplie rs-b. Identity of supplie rs of bottle or can vending machines; c. Technical problems encountered in the actu-al operation of bottle or can vending machines; j .,1 d. Incentive t - ms, whether in cooperation i j with a manufat r of bottle or can vending ma-j chines or a manufacturer of soft drink syrup, in connection with the purchase of bottle or can vend-Ing machines; e. Any meetings, corre spondence, conve rsations, or other contacts between a bottler and any manu- [ facturer of soft drink syrup pertaining to or con-r cerning purchase by the bottler of bottle or can vending machines not approved or accepted by j j[ said soft drink syrup manufacturer. i 8. Any memoranda or documents in the Commission's ,f files relating to the Commission proceeding denominated in the Matte r of The Vendo Co., FTC Dkt 6646 (September 6, 1957), which will show the reasons or basis for the Commis-l ston's approval of the settlement which permitted Vendo, al-l leged to have been the nation s largest manufacturer of soft drink vending machines, to retain ownership of Vendorlator Mfg. Co., one of Vendo's major competitors in this market, L where the combined sales of the merged company were al-w leged to have accounted for over 50% of the domestic bottle verding machine market. Respondent asserts, with respect to specifications 3-6 i and 8, that it requires this info rmation in orde r to elicit evi-d dence in support of its theory of the case as to the relevant h ) . u:) - '.gf;Vd h.,g-(.A a 1 -aa
u j l l u, 20 AdL2d DECISt0Ns 623 market in this Section 7 proceeding and to prepare for the cross-examination of complaint counsel's witneeses. To make its defensive showing respondent asse rts that it desires to demonstrate "the separate nature of the Coca-Cola and othe r bottle r ma rkets". According to the Examiner, re-f spondent intends to establish that the re was no substantial ac-ir-tual or potential competition between Seeburg and Cavalie r, [ the acquired conce rn, at the t ime of the acquisition. '9' The Examiner states that apart f rom the cententionth'at the acquired concern was not competing in the alleged rele-vant market in which Seeburg did business, the purpose of the discovery in question under these specifications is ob-scure since the nature of the relevant market, functionally, 7 which respondent proposes to establish, is not disclosed. The Examiner finds that respondent has not made the pre-requisite showing of good cause necessary under $1.134. jg; The Examiner further holds that an application for such dis-t. s.. closure should be supported by a specific indication of rele-vancy and mate riality as to each and eve ry class of document, supplemented by an explanation of how such documents would i p fit into respondent's patte rn of defense, including "the func - tional" market structure which respondent believes the evi-r dence may establish. S (7c.13] The Examine r, in view of his proximity to the i proceeding, is in a more favorable position than the Com-e ..O mission to judge in the pa rticular instance the proper scope l /, of discovery proceedings.,l_/ As a result, the Commission l will. 6 necessity, give considerable weight to his analysis v 'g of applications for production of confidential documents from j l 1 the Commission's files unde r Rule 1.134. A showing of gen-l i eralized relevance or possible helpfulness is not enough. A showing of good cause under $ 1.134 requires a demonstra-n, tion of "real or actual necd". Viviano Macaroni Company, I j Docket No 8666, Orde r Ruling on Question Certified (Ma rch l .. ~ 9, 1966). We ag ree with the Examine r that on the facts pre-sented the showing of need requisite to the production under j i the rule has not been made. In this connection, we note fur-the r the Examine r's statement that the respondent has made no attempt, through the deposition procedures available to a it, to document the necessity of securing the data demanded l V f rom the Commission's files. .? t Much of the data which respondent desires to secure 254 f rom the Commission's files is obviously confidential, both in the case of custome rs of the vending machine manufactur-N ing industry and competitors of Seeburg, since it relates to 7, sensitive topics such as the marketing strategies, as well as the technical, marketing ami purchasing experiences and l l h, plans of such customers and competitors. Sensitive infor-( mation of this nature should not be released by the Commis-sion from its confidential files without compelling need. g w Disclosing information f rom the Commission's confidential I 3 .,g files under a lesser standard would necessarily engende r .., V g ' ' -I/ Cf. Topps Chewing Gum, Dochet No 8463, opinion and j' order disposing of motions, July 1. 1953. C,. l
t i 624 PIKE AND FascitEn, ADMINISTRATIVE LAW (2d) L t .p resistance on the part of companies and individuals cooper-ating in Commission industry investigations. It would be j likely to se riously retard voluntary compliance with the l I Commission's efforts to obtain the data which it needs in l S industry inquiries. Obviously, the cooperation which the l Commission has received in the past from business depends in la rge pa rt on the confidence of indust ry that cor.fidential data submitted to this agency will not be released in an ad-l judicative proceeding unless specific and conc rete need j therefor has been shown. j The Commission, at this time, is not fully informedas to the measures respondent has taken or intends to take to f secure the information requested in specifications 3-6 di-j rectly f rom the third parties involved under the procedures set forth in $$ 3.10 and 3.17 of the Rules. At this time no l determination can be made that such data is unavailable to l respondent under these procedures. Wherever sensitive j data relating to customers or competitors of the nature in-volved in this request is concerned, respondent should util-l ize the procedures made available by the Commission's Rules to secure the data directly f rom the source rather l than from the Commission's confidential files. Under these 4 procedures, the third parties f rom whom information is e sought are, of course, e ititled to state their views on the competitive implications of disclosing the information re-quested and on the proper measures for preserving the con-fidentiality of the data produced pursuant to subpena where i such measures a re appropriate. 2/ In this connection, it I appears from the Hearing Examiner's certification that cer-tain of the data sought in specifications 3-6 has already been l obtained by respondent. Certainly due process requires no more than that respondent be able to secure evidence to pre-t sent its defense. Re sponde nt, of course, does not have an unqualified right to demand confidential data from the Com-i mission's files at any particular time or stage in a proceed-l ing. See The Sperry and Hutchinson Company v. Fede ral j Trade Commission, CCH Trade Reg Rep 571,800 (SD NY 1966). 3/ We turn now, specifically, to sepcification 8 of Seeburg's ( motion for production, which seeks any memoranda or docu-ments in the Commission's files showing the reasons or basis k 2/ If a pa rty responding to respondent's subpena states that it would prefer to have the Commission release documents already in this agency's files which it pre-I viously furnished in order to save itself the trouble of responding to Seeburg's subpena, then such data may [ be released to respondent. ( 3_/ Cf. American B rake Shoe Company v. Sch ru p, 1965 f - 1 Trade Cases '71,575 (D Del 1965). "s.$id,; 4 t 4 eq agh 1 ?ydy@NN l ShW.hn.13 k l
v 20 AdL2d DECISIONS 625 tor the Commission's approval of the settlement in The conpar-23,3 h,. Vendo Co., Docket No 6646, which pe rmitted Vendo to re- % th.. tain ownership of the Vendorlator Mfg. Co. Respondent re-quests these files on the ground that the documentation sought ds in c h i h.. may contain material necessary to adequately cross-examine adep.n<ls complaint counsel's witnesses f rom the Vendo Company "as ~ eder tiil to the realities of competition in the industry, illustrated by h an a<!- Vendo's attempt to diversify by acquiring Vendorlator." In necel addition Seeburg asserts "the requested documents may al-so support respondent's defensive showing as to the separate nature of the Coca-Cola and trade bottler markets." On both irm. el a s counts respondent's showing of need is so conjectural that it l13..to necessarily fails to meet the prerequisites for release of b6.h-confidential information unde r $ 1.134 of the Rules.,4_/ cedarcs Insofar as the demand encompasses internal memoran- .ima no tc ht.. t o da of the Commission in an attempt to probe its mental pro- , tit i v e cesses in deciding to accept the consent settlement in Vendo, tire in-these are clearly not a proper subject of discovery. 5/ The .uld util-fact that intra-agency memoranda of this kind come within gin - the exemption of $3(e)(5) of the Freedom of Information Act the r has already been considered in connection with respondent's p)r t h. s e-motion to vacate. (See 20 Ad L 2d 603]. That discus sion al-Un is so applies to this issue as well. On the 'kan (3a. 3, 7b. 8, 7b. I1, 7c.13] Respondent contends that r-the..in-the procedures for application to the Commiss' ion under sh-r- $1.134 of the Rules for the release of confidential informa-jo n. it tion from the Commission's files are inapplicable here, on Mhat.. r-the ground that the Examiner has the power to order the pro-iMe -an duction of the documents in question under $3.11 without ref- 'm i erence to the Commission. Seeburg relies on the clause in ip r a
- p t p r,..
$1.133(a) exempting from the procedures for the release of be confidential information unde r $ 1.134 those documents whose in .h C =use may become necessary in connection with adjudicative m-h.!*
- si t"***d-p roc e e ding s ". The fact is that the Commission has already -
6 ruled on the scope of the exception in $ 1.133 on which D *.y i N =*.r a, b.. -4/ The consent order in question was issued more than Lo nine years ago, on September 5,1957. See The Vendo Company, 54 FTC 253 (1957). q, j o ita. ~~5/ Grabe r Manufacturing Company, Inc., Docket No 8038, ! b., Order Ruling on Questions Certified by the Examiner and Respondents
- Appeal f rom Hearing Examine r's Rul-j u p.
hW ing, December 13, 1965; R. II. Macy le Co., Inc., Dock- < k a,v et No 8650, Order Ruling on Questions Certified and I h Denying Motion to Strike Certification September 30, i V-1965. Cf. Modern Marketing Service, Inc., Docket No ] 3783, Order Ruling en Question Certified, January 7, I 7 1966. See also Coro, Inc. v. Federal Trade Commis-a i L s io n. 338 FZd 149 (1st Cir 1964), cert denied, 380 k US 964 (1965). ' ~
- 1t i
g
- d
l t l 626 PIKE AND FiscHen. ADMIN!3TRAT!YE I.AW (2d) f respondent relles. In Viviano Macaront Company, Docket No 8666 Order Ruling on Question Certified (March 9, l 1966), the Commission stated: ... The exception in pertinent part relates to l material and information which may be necessary l for use in connection with an adjudicative proceed-l ing and this, in general, includes that which com- ~ plaint counsel must use in the presentation of his case and other vital documents suchas Jencks type l l statements.... It is not a general authorization t for pretrial discovery bypassing the Commission's requirements in i1.134 governing the release of i { confidential data.... " 6_/ l l There is no question here, as respondents states, of $ 3. I1 ! L not meaning what it says if this constructionoithe Rules is followed. Obviously, on their face $ $ 1.133, I.134 and 3. I1 g are expressly related by the terms of $1.133. The Rules 'must be read together and the construction given i1.133is a reasonable one, doing no violence to the prcvisons of $ 3.11. Respondent's argument that this construction of the Rules requires it to resort to procedures not published in the Federal Register and therefore violates Section 3(a) of the Administrative Procedure Act is without merit. (6a. 2, 7a.1, 7c.13, 7 c.14, 12. 2] Seeburg further as-serts that Sections 6(a) 7(a) and 12 compel the production r [ of the documents which it seeks pursuant to $ 3.11 of the Commission's Rule s. Othe rwis e, respondent argues, its -g right under Section 6(a) to be represented and advised by [ counsel would be reduced to an empty formality if com-plaint counsel, in an adjudicative proceeding, we re accord-ed a preferred position in their discovery and pretrial preparation by the Commission's interpretation of $ 3.11. With respect to Section 7(a)'s direction that adjudicative proceedings be conducted in an impartial manner, respond-ent similarly argues that this provision would be frustrat- + ed if it is not granted the pretrial discovery which it seeks. f Respondent, in addition, relies on Section 12's guarantee that all requirements or privileges relating to evidence i l and procedures shall apply equally to agencies and persons. Ce <t ntions similar to those advanced by Seeburg were i passed on by the District Court for the Southern District of New York, in The Spe rry and.Ilutchinson Co. v. Fede ral Trade Commission, supra, when the court conside red i claims that the Commission's denial of motions under $3. I1 of the Rules for discovery contravened statutory rights l I w -6/ See a' Iso Inter. State Builde rs, Inc., Docket No 8624, Order and Opinion Directing Remand, April 22, 1966. 2 u. m $l .T J l
- - MG
- l?
,L -- Ta I,'. 20 AdL2d Dr. cts:0NS 627 kD00" guaranteeing access to material evidence under Sections geh 9 7(c) and 12 of the Administrative Procedure Act.1/ The y court ruled: tsN "I cannot agree. Section 7(c) provides simply P'Y that 'every party shall have the right to present ie d. his case or defense by oral 'or documentary evi-M* dence, to submit rebuttal evidence, and to con-
- I*
duct such cross-examination as may be required WP* for a full and true disclosure of the facts.' These rights certainly do not extend to an unlimited priv-ilege to examine all the Commission's files, which 44 i in essence is what Sperry seeks. As previously j r pointed out, there has been no showing here that !jg g i g g Sperry will be denied any rights to present its defense and this court is in no position to find 'g,,, that Sperry is likely to be deprived of essential -pd ',,; I material at what will undoubtedly be a lengthy l ga, ' hearing yet to be commenced.
- l.Ii*i.
I t t.t "Section 12 adds little to Sperry's argument, ,,,g.., b.,3 This provision states that 'except as otherwise y.,. required by law, all requirements or privileges relating to evidence or procedure shall apply f equally to agencies and persons.' (emphasis ad-ded.) By no means can it be said that the Com-q p,... L c o.., mission has plainly flouted this open-ended legis-ad ' lative direction." CCil Trade Reg Rep 571,800, l sup ra, at 82,703. s, h4
- < w..
That holding is applicable here. Seeburg, as we have noted already, is not foreclosed from seeking the evidence he r.'. p e.. which it seeks pursuant either to $ 3.10 or $3.17 or even to 11; again seek this data from the Commission's files if it can a l et... meet the standard of necessity outlined in this and previous decisions. The court, in Sperry and flutchinson, clearly 1 3*> hei u held that a respondent does not have the right, as we noted P**+,. above. to confidential data from the Commission's files at b'**. any particular time or stage in the Commission's proceed-4* '.
- ing as long as there is a reasonable opportunity at future I
stages of the proceeding to adduce the evidence it needs, l ! ** ' s. t i F8** - Significantly, the district court characterized the re-h"
- quirement of Section 12 that all requirements or privileges relating to evidence or procedures shall apply equally to agencies and persons as an "open-ended legislative direc-i t i on. " In short, while it has the duty of insuring that 1 M' Seeburg has the opportunity to secure and present its evi-l l
dence, the Commission can make provision that this is done i 4 w c I 7_/ Although respondent here relics on Sections 6(a) and [,..., 7(a), as well as 12, of the Administrative Procedure . p i,g 4 t Act, itt contentions are not materially. different from L those ruled upon by the court. 1 "(
? l 628 PIME AND FiscutR, ADMIMSTRAT!YE LAW (2d) I ? in a manner consistent to the greatest extent possible with l I the protection of confidential sensitive business data in the j Commission's files. As the court stated: [ "Such ' equal' rights of access to evidence as i Sperry may have under this provision are by no means unqualified. As the statute indicates these rights are plainly subject to the protec-k tions against disclosure of confidential informa-i g tion required by the Commission's rules s [. "Moreove r, even assuming there is a s tatutory right of ' equal' access to evidence, it.ould e j J ll scarcely be said to require such access at any f i particular time or at any pa rticular stage in the i l proceeding. Nor would it include access to any t evidence which is not shown to be necessary to i I the defense. There is no showing here that ac-1 I' cess to any such material will necessarily be J g denied in this adjudicative proceeding." CCII i Trade Reg Rep 571,800, supra, at 82,703. Finally, the Commission does not construe $ 1.133 aas a blanket of secrecy for all documents in (complaint] coun-sel's possession". The fact of the matter is that $1.133 and $ 1.134 do not constitute an impenetrable barrier to the i Commission's confidential files, but merely require, as we have stated here and in otber cases, that docurnents in the confidential category should not be released without a show- [ ing of necessity on the part of a respondent ena, aged in put-l ting on his defense. This is by no means an insuperable ba r rie r. The Freedom of Information Act of 1966 does not indicate that the Commission should abandon the standard of necessity in the case of discovery proceedings involving l application for confidential documents from the Commis-sion's files. In fact, the provisions of the Act indicate to I the cont rary. The Act does not concern itself with discov-ery procedures applicable to adjudicative proceedings.- It does concern itself with enlarging the access of the public and in clarifying the right of the public to documents in ad-ministrative files. Ilowe ve r, Section 3(e) of the Act pro-r vides expressly that documents inthe categories enumerated i therein shall be exempt from the provisions of the Act. In this connection, Section 3(e)(4) exempts f rom the provisions of the Act trade secrets and commercial or financial infor-mation obtained from any persons and privileged or confi-dential, 8/ while Section 3(c)(7) exempts investigatory files 8_/ " Exemption No 4 is for ' trade secrets and commercial L or financial information obtained f rom any person and L privileged or confidential.' This exception is necessary 6 to protect the confidentiality of informationwhichis ob- ~ tained by the Gove rnment through questionnaires or other inquiries, but which would customarily not be g (Footnote continued on following page]. l ,i c a 3*3 ' s 3 .$h
20 AdL2d DEctsr0NS 629 I
- h compiled for law enforcement purposes except to the extent t'
availabPe by law to a private party. 9/ Certainly, while these exemptions do not exclude documents in this category f rom discovery proceedings when a proper request is made, they clearly indicate that it was not the intent of Congress to change with this legislation the standards whereunder dis-covery would be required with respect to such documents. In short, in the case of discovery proceedings relating to, confidential information from the Commission's files com-ing within the exemptions of Section 3(e) of the Act, the test is~ still one of a showing of necessity, which has not been met in this instance. Since the Commission is adequately informed of the is-sues raised by respondent's motion for production, the re-quent for the opportunity to present briefs and o,ralargument will be denied. The motion for production is denied for the reasons set forth above. 133 =ao STATESMAN LIFE INSURANCE CO. t]coun- $1.133 Federal Trade Commission, December 7,1966 r to th* Docket No. 8686 es wa e in tha s show-7c.13(7) Disclosure of evidence in possession of in put-agency denied, pe rable oes not In proceedings charging respondent with decep-cndard tive advertising practices, the Commission will volving deny respondent's request for the production of mmis-the Commission's memorandurn closingproceedings cate to discov. is. It 8_/ (Footnote continued f rom preceding page]. Public released to the public by the person from whom it was 6 in ad. obtained. This would include business sales statistics, et pro. inventories, customer lists, and manufacturing pro-Jerated cesses...." S Rep No 813, 89th Cong,1st Seas 9 .ct. In
- viaton, (1965).
9/ ~7. Investigatory files compiled for law enforcement e ng " purposes except to the extent available by law to a pri- . gig vate party: This exemption covers investigatory files related to enforcement of all kinds of laws, labor and "Srcial securities laws, as well as criminal laws. This would on and include files prepared in connection with related Gov- ' Gen ry ernment litigation and adjudicative proceedings. Sil60 ,"j is ob-is not intended to give a private party indirectly any l earlier or greater access to investigatory files thanhe or
- I "'
would have directly in such litigation or proccedings." HR Rep No 1497, 89th Cong 2d Sess.11 (1966). 9 j s
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING APPEAL BOARD In the Matter of ) ) HOUSTON LIGHTING & POWER COMPANY, ) Docket Nos. 50-498A et al. ) 50-499A ) (South Texas Project, Units 1 ) and 2) ) ) TEXAS UTILITIES GENERATING COMPANY, ) Docket Nos. 50-4 ei SA et al. ) 50-446A ) (Comanche Peak Steam Electric ) Station, Units 1 and 2) ) CERTIFICATE OF SERVICE I HEREBY CERTIFY that copies of the foregoing: MEMORANDUM OF HOUSTON LIGHTING & POWER COMPANY CONCERNING AUTHORITIES RELEVANT TO THE DIS-COVERABILITY OF DOCUMENTS GENERATED IN CONNECTION WITH SETTLEMENT were served upon the following persons, by hand *, or by deposit in the United States Mail, first class postage prepaid, this 4th i day of April, 1980. s 'ojglM G.' Green
Alan S. Ro2cnthcl, Chcirman Jon C. Wood, Ecquiro Atomic Safety &' Licensing Appeal Matthews, Nowlin, Macfarlane Board Panel ~ & Barrett U.S. Nuclear Regulatory Commission 1500 Alamo National Building Washington,~D.C. 20555 -San Antonio,' Texas 78205 Thomas S. Moore Charles G. Thrash, Jr., Esquire Atomic Safety and Licensing Appeal E.W. Barnett, Esquire Board Panel Theodore F. Weiss, Esquire U.S. Nuclear Regulatory Commission J. Gregory Copeland, Esquire Washington, D.C. 20555 Baker & Botts 3000 One Shell Plaza Michael C. Farrar Houston, Texas 77002 Atomic Safety & Licensing Appeal Board Panel R. Gordon Gooch, Esquire U.S. Nuclear Regulatory Commission Steven R. Hunsicker, Esquire Washington, D.C. 20555 Baker & Botts 1701 Pennsylvania Avenue Marshall E. Miller, Chairman Washington, D.C. 20006 Atomic Safety & Licensing Board Panel Frederic D. Chanania, Esquire-U.S. Nuclear Regulatory Commission Michael B. Blume, Esquire Washington, D.C. 20555 Ann P. Hodgdon, Esquire U.S. Nuclear Regulatory Commission Michael L. Glaser, Esquire Washington, D.C. 20555 1150 17th Street, N.W. Washington, D.C. 20036 Roff Hardy Chairman and Chief Executive Sheldon J. Welfe, Esquire. Officer Atomic Safety & Licensing Board Central Power and Light Company Panel Post Office Box 2121 U.S. Nuclear Regulatory Commission Corpus Christi, Texas 78403 Washington, D.C. 20555 G.K. Spruce, General Manager Atomic Safety and Licensing City Public Service Board Appeal Board Panel Post Office Box 1771 U.S. Nuclear Regulatory Commission San Antonio, Texas 78203 Washington, D.C. 20555 Mr. Perry G. Brittain Chase R. Stephens, Supervisor (20) President Docketing and Service Branch Texas Utilities Generating Company U.S. Nuclear Regulatory Commission 2001 Bryan Tower Washington, D.C. 20555 Dallas, Texas 75201 =Mr. Jerome D. Saltzman G.W. Oprea, Jr. Chief, Antitrust and Indemnity Executive Vice President. Group Houston Lighting:& Power Company U.S. Nuclear Regulatory Commission . Post Office Box 1700 Washington, D.C. 20555 Houston, Texas 77001 J. Irion Worsham, Esquire R.L.~ Hancock, Director Merlyn D. Sampels, Esquire City of AustinLElectric Utility. Spencer C. Relyea, Esquire Post Office Box 1086 Worsham, Forsyth & Sampels Austin, Texas 78767 2001 Bryan Tower, Suite 2500 Dallas, Texas 75201:
i Kenneth M. Glazier, Esquire Don R. Butler, Esquire David A. Dopsovic, Esquire 211 East Seventh Street Frederick H. Parmenter, Esquire Austin, Texas 78701 Susan B. Cyphert, Esquire Nancy A. Luque, Esquire Mr. William C. Price Robert Fabrikant, Esquire i Central Power & Light Company Energy Section Antitrust Division Post Office Box 2121 U.S. Department of Justice l Corpus Christi, Texas 78403 P.O. Box 14141 Washington, D.C. 20044 Mr. G. Holman King 3 West Texas Utilities Company Morgan Hunter, Esquire Post Office Box 841 Bill D. St. Clair, Esquire Abilene, Texas 79604 McGinnis, Lockridge & Kilgore Fifth Floor Jerry L. Harris, Esquire Texas State Bank Building [ Richard C. Balough, Esquire 900 Congress Avenue City of Austin Austin, Texas 78701 Post Office Box 1088 Austin, Texas 78767 W.S. Robson l General Manager l 4 Joseph B. Knotts, Jr., Esquire South Texas Electric Cooperative, Nicholas S. Reynolds, Esquire
- Inc, j
C. Dennis Ahearn, Esquire Route 6, Building 102 Debevoise & Liberman Victoria Regional Airport i 1200 Seventeenth Street, N.W. Victoria, Texas 77901 Washington, D.C. 20036 i Robert C. McDiarmid, Esquire Don H. Davidson George Spiegel, Esquire City Manager Robert A. Jablon, Esquire j City of Austin Marc R. Poirier, Esquire P.O. Box 1088 Spiegel & McDiarmid Austin, Texas 78767 2600 Virginia Avenue,1N.W. j Suite 312 Jay Galt, Esquire Washington, D.C. 20037- ~ i Looney, Nichols, Johnson & Hays j 219 Couch Drive Kevin~B. Pratt Oklahoma City, Oklahoma 73102 Texas Attorney General's Office-l Post Office Box 12548 Knolant J. Plucknett Austin, Texas 78711 Executive Director Committee on Power for the South-William H. Burchette, Esquire west, Inc. Frederick H. Ritts, Esquire 5541 East Skelly Drive Law Offices of-Northcutt"Ely-Tulsa, Oklahoma 74135 Watergate 600 Building Washington,' D.C. 20036-John W. Davidson, Esquire Sawtell, Goode, Davidson & Tioili Tom W. Gregg, Esquire t 1100 San Antonio Savings Building. ' Post Office Box, Drawer 1032-San Antonio, Texas' 78205 San Angelo,LTexas ~76902 Douglas F. JohW, Esquire Leland.F. Lea,therman,' Esquire McDermott, Will'and Emery McMath, Leatherman & Woods,LP.A. 1101 Connecticut Avenue, N.W. 711 West Third' Street- ~ Suite:1201 Little Rock, Arkansas "i1201 Washington, D.C. 2003,6 .3
,+ Joseph Gallo, Esquire Robert H. Loeffler, Esquire David M. Stahl, Esquire Isham, Lincoln & Beale 1120 Connecticut Avenue, Suite 325 Washington, D.C. 20036 Michael I. Miller, Esquire James A. Carney, Esquire Sarah Welling, Esquire Martha E. Gibbs, Esquire Isham, Lincoln & Beale One First National Plaza Suite 4200 Chicago, Illinois 60603 Paul W. Eaton, Jr., Esquire Hinkle, Cox, Eaton, Coffield & Hensley 600 Henkle Building Post Office Box 10 Roswell, New Mexico 88201 Robert M. Rader, Esquire Conner, Moore & Corber 1747 Pennsylvania Avenue, N.W. Washington, D.C. 20006 W.N. Woolsey, Esquire Kleberg, Dyer, Redfors & Weil 1030 Petroleum Tower Corpus Christi, Texas 78474 Donald M. Clements, Esquire Gulf States Utilities Company Post Office Box 2951 Beaumont, Texas 77704 o Dick Terrell Brown, Esquire 800 Milam Building San Antonio, Texas 78205 w}}