ML19331A180
| ML19331A180 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 08/21/1973 |
| From: | Ross W, Watson K CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), WALD, HARKRADER & ROSS |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| NUDOCS 8006110632 | |
| Download: ML19331A180 (15) | |
Text
i A ,
UNITED STATES OF AMERICA BEFORE THE ATOMIC ENERGY COMMISSION In the Matter of )
) Docket Nos. -32 CONSUMERS POWER COMPANY ) ov sau (Midland Plant, Units 1 and 2) )
MOTION TO RECONSIDER BOARD RULING CONCERNING INSPECTION OF PRIVILEGED DOCUMENTS Consumers Power Company ( Applicant) hereby moves the Board to reconsider that part of its August 8 order which would permit counsel for the intervenors to inspect documents that Applicant has withheld on grounds of privilege.
I. Applicant's Acquiescence in Board's Order May Constitute Waiver of Its Privilege.
In the telephone conference on August 2, 1973, Appli-cant's counsel indicated that he would recommend to his client that it acquiesce in the inspection procedure proposed by the Board, in order to avoid burdening the Board with the in camera reading of the documents in question.
However, in the course of considering this advice, counsel became aware of a recent decision in the current I.B.M.
l litigation in Minnesota and New York indicating that there is a l
l 1/ In a telephone conference on August 10, 1973, between Mr.
l Clark and counsel for all parties, Applicant set forth its concern about the August 8 order and received leave to file the instant Motion. Applicant also advised that in view of ongoing deposition schedules this Motion could not be filed during the week of August 13, 1973, but would be expeditiously pursued thereaf ter.
8006 110[
, x .
substantial danger that the Company's compliance with this order would subsequently be found to constitute its waiver of attorney-client privilege with respect to these documents. That is, while the protective provisions of the Board's August 8 order might provide adequate assurance against the misuse of these documents in this proceeding, compliance with that order might in another forum be deemed to be an unqualified waiver of privilege. Thus, the Board's order could not protect Applicant 'n subsequent pro-ceedings before other courts and agencies from these consequences.
In Control Data v. IBM (D.C. Minn. .Civ. No. 3-68-312), a private antitrust action, IBM and Control Data ("CDC") undertook massive discovery against one another. To expedite the proceed-ing, each party agreed to permit representatives of the other parties to inspect and copy certain of the party's documents on the condition that surrender of those documents would not consti-tute a waiver of privilege. This agreement was embodied in an order of the court which stated:-2/
"1. Neither IBM nor CDC shall be deemed to have waived the attorney-client or other privilege as to any document which heretofore has , or if reasonable precautions as in the past are taken hereafter may, come into the possession of any party to pending litigation, including the case of Greyhound Computer Corporation v. International Business Machines Corporation.
"2. The determination as to whether a certain document is in fact privileged shall be made by the Master heretofore appointed by this court under the practices and rulings heretofore, or that hereaf ter may be , established.
2/ Control Data Corporation v. IBM, 16 Fed. Rules Serv. 1233 (D. Minn. 1972).
l "3. Any document found to be privileged shall not be admissible in evidence at any trial, or hearing nor used in depositions or other discovery proceedings."
Thus, in compliance with an agreement among parties and a court order that surrender would not constitute waiver, large numbers of privileged documents were made available by IBM to opposing counsel.
Meanwhile, the Antitrust Division of the Department of Jastice was proceeding against IBM in the Southern District of New. York. United States v. IBM (S . D. N.Y. Civ. Act. No.69-200).
The Department there sought, and on September 26, 1972 Judge Edelstein granted an order that IBM produce the privileged docu-ments that had been the subject of the agreement among parties and the order of the court in Minnesota. Judge Edelstein's theory was that the surrender of the subject documents to Control Data, albeit pursuant to a court order did in fact constitute a waiver of privilege. As of this moment, Judge Edelstein's order still s tands-3/
and IBM has been found in contempt for its failure to comply therewith. -4/
3/ The subsequent procedural history of the matter is complex and is well summarized in Judge Edelstein's latest order in the case attached hereto.
4/ At the instance of the Department of Justice, Judge Edelstein assessed IBM $150,000 for its contempt, but the order was immediately stayed. Ibid. See also Antitrust and Trade Regulation Report, No. 625 (August 7, 1973), p. A-1 (attached hereto).
In the instant proceeding Applicant has consistently shown itself ready to take whatever steps are reasonable to ex-pedite this proceeding. We do not believe, however, that it would be reasonable to ask that we waive our attorney-client privilege in all forums except the AEC -- and it is the teaching of United States v. IBM that Applicant's compliance with this order might have exactly that effect with respect to these documents.
II. An alternative procedure is available which will not constitute waiver or unduly burden the Board.
Applicant is prepared to undertake any course of action which will satisfy the spirit of the Board's August 8 order con-cerning prineged documents and which will not constitute a waiver ,
of its privilege claims relating thereto. We agree that in camera inspection of the many documents in question by the Board should be avoided if there is a reasonable alternative.
In order to avoid this burden, Applicant is willing to prepare and make available to counsel for Intervenors detailed descriptions of the context of the documents with regard to which privilege is challenged. This description would not communicate l
l the substance of the request for legal advice or legal advice l
given in each of the documents , since this might well void the privilege; but it would provide a description of the identity and function of the senders and receivers of the documents (where this is not obvious in the context) and of the subject matter covered by the legal advice.
)
If counsel for the Intervenors , af ter reviewing these descriptions , has questions about particular documents , Applicant's counsel is prepared to discuss them with him. This process will avoid the necessity for the Board to read all but a relatively few of the document pages for which privilege is claimed, while pre-serving the privileged status of those documents subsequently deemed by the Board to so qualify.
WHEREFORE, Applicant moves the Board to reconsider its August 8 order concerning inspection of privileged documents.
Respectfully submitted, Wm. Warfield Ross Keith S. Watson Attorneys for Consumers Power Company WALD, HARKRADER & ROSS 1320 Nineteenth Street, N.W.
Washington, D. C. 20036 (202) 296-2121 Of Counsel:
i Harold P. Graves, Esq.
I Consumers Power Company 212 West Michigan Avenue Jackson, Michigan 49201 August 21, 1973 I
, o .
ATTACHMENTS
- 1. Judge Edelstein's contempt order 1n United States v. IBM Trade Cases'174,6 E , supra, in 1972-3
- 2. Present status of United States v. IBM, supra, in Antitrust and Trade Regulation Report, No. 625, p. A-1.
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r ATTACHMENT 1 ss s.am Cited 1973..' Trade Cases 94,739 U. S. v. IBM
[6.] Defendant ,having failed to come [9.] Plaintiff, the United States of Ameri-forward with countervailing affidavits or ca is entitled to judgment as a matter of other materials as provided by rule 56(c) law.
of the Federal Rules of Civil Procedure. motion for summary the factual averments of plaintiff's afE- judgment . [10.] Plais.intiff's granted.
davits will be taken as established;
[7.] There is no genuine issue as'to any III*I ^" injunction is entered against material fact. defendant in the terms of the Commis-sion's cease and desist order.
[8.] On, the seventeen specine occasions [12.} The court will set a hearing to fix set fortti m the precedmg findings of fact the amount of the civil penalty.
(f 10 26), defendant, Grady L Rushing, violated the snal cease and desist order of .. .c ". * -
the Federal. Trade Commission.> J. ^ ' ' ' -
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[7 74,632] United States v. International Business bluhmes Corp.
UA. District Court, SoutheraiDist.ict of New..YSk'.l69 Civ. 200.DFiled Augus't 1,1973.U '4i c . ::.: .i yniLv.s .Q k*-.-. . .
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Case No. 2039, Antitrust Division, Department of. Justice.
,.j .. X : :' in==-
1.- r, 2. m. Sherman Act"-.*. , . . . . . . . . ."..
Department of Justice Suite-Discovery-Failure to Produce-Civil Contempt-Daily Fine-Reviewahility.-For failure tat produce documents.in. accordance with a pretrial ordert ar company was found in civil. contempt and was. to.be fined $150,000 per day for e:.ch' day after a set date- that-it failed to produce. Civil, rather than criminal, contempt was appropriate in the case for two reasons: first, the purpose of the proposed sanction was remedial, to coerce compliance with the court's order, and. not punitive; second, the proposed sanction was contingent in nature, and defendant would be given the opportunity to purge itself of the contempt by. complying.with the pretrial order. A request that the contempt run against the attorneys, rather than the company, so as to set the stage for an immediate appeal to test the merits of the pretrial order, was rejected, the court observing that except for certification it is not proper for the district court to enter an order designed ter either thwart or promote an interlocutory appeal-that the decision as to the appeatability of an order of the district court is a matter properly to be decided by the court of appeals. See 1 8717, 8770.
' ~
Opinion How We Got Here Ener.sts N. Ch. J.: The United. States o' f tac Background America, petitioner herein, seeks an order On. January 17, 1969, the United States adjudging - respondent International Busi- filed a complaint in this court a!!eging that ness Machines Corporation (IBM) to be IBM had violated Section 2 of the Sherman in civil contempt of this court's Pretrial Act. 15 U. S. C. I 2. In addition, a number Order No. 5, entered September 26, 1972. of private antitrust suits were also brought At a hearing on July 16, 1973, counsel for against IBM.' The private suits were con-both petitioner and respondent prefaced solidated, pursuant to 23 U. S. C. I 1407, their remarks with a statement of "How before Judge Neville of the United States we got here." The court too will adopt this District Court for the District of Minnesota.
approach and begm with a detailed account In the course of pretrial proceedings in one of the tangled and time-consuming events of the cases assigned to him.' Judge Neville which have produced the present situation. ordered the accelerated production of docu-
' Of these suits. only two remain pending. ness Xachinee Corp. is awalting decision after Crev40und Computer Corp. v. later ietsonal trial t>efore the distrtet court tar the Northern Bumsess Mac4:=es Corp. is pendine on appeat Distrtet of Oklahoma.
In the Ninth Creutt frem a judement erttered 8 Castrol Date v. lateencreosial for IB.%t after trial in the Atttora distrtet Busters, Rochese,Comtaos Corpor stos (D. Minn. Ov.
court. The Teles Corp. v. Inter <nataanai Buss. Acsnon No. 348 312).
Trade Regulation Reports 1 74,532
94,790 Court Decisions . ss s.am U. S. u lB3f ments to Control Data Corporation by divided panel of the Court of Appeals held IBM. Itis _as to some of these documents, that it had jurisdiction of both the appeal produced to CDC, that IBM has asserted, and the petitiour. and ordered that Pretrial in this court, its claims that the attorney- Order No. 5 be vacated. [1973-1 TRADE client ' privilege was protected by Judge Casts 174,293} 471 F. 2d 507. On applica-Neville's order of April 18,197L IBM has tion by the United States, the court reheard also claimed that the privilegeg'if waived the. appeal.cn banc
~
r and reversed the panel at allFhas-been waived inadvertently.w. decision. In a'4-2 decision the coure ruled
'h'* the Expediting Act,15 IJ. S. C. $ 29, On- April'4, 1972 IBM' de' liv'ere7to requans that appellate review of Pretrial plaintiff 'a' list of these docments.which it Order No6 5 be had, if at all, m the Su-had. excised from certairt rolls'of micro-film that had been previously delivered to P'*** Court. : Accordingly, the , court <=
the G6eernment. On Apri' 7 the-United bec disuuaseo petition forwn,both the appeal,and N mandamus. Unitedthe States'nioved, in this court, for an order compelling production of the documentsy Ain udatumsdond Budans 3fackan CorA [19731 TaADE Casts 7 74.4M], Nos.
After argument, the court, on September 363, 364 (2d Cir., September 1972 Term,
- 26. 1972, entered its Pretriald)rder.-No.-5, em bone opinion filed Ly 8,1973) r b which.has.been the source of.these subse- appellate proceedings' were qent proceedings. -It provided*thacNIBM pendmgm.theseD*' the Court of Appeals, IBM, on immediately deliver to plaintiff,in the form November 24 1972, filed a " protective" provided to Control Data Corporation, a copy of each document withheld and ex- Notice of Appeal to the S,upreme Court cised by it from the said micro 61m,. all from Pretrial Order No. 3 The appeal was docketed on February 24,1973. No.
such. documents punortedly being identi6ai and described by Charles M. Waygood, at- 72 1173.
torney for defendant, in a letter addressed - On May Ja,1973, IBM moved this court to plaintiff's counsel, dated April 4,1972, for a further sta> of Pretrial Order No. 5, a copy of said letter being attached to and and a stay was graa '. until June 4, 1973.8 made a,part of this order." e - On June 1, an application for a stay was On October 6,1972, the court- denied made to Mr... Justice Marshall Argument IBM's request to amend Pretrial Order was heard before him on June 4, and a temporary stay was granted, subject to No. 5 by adding a statement pursuant to further order of the Supreme Court. On 28 U. S. C. $ 1292(b), but " stay [ed] the implementstion of pretrail Order No. 5 June 13, the Supreme Court issued an order until October 20, 1972, to enable i B. M. refusing ter stay Pretrial Order No. 5 and to seek appropriate appellate review other the mandate of the Court of Appeals.
than by way of an application under 28 g gg pyg, U. S. C. I 1292(b).
On June 15,1973, Mr. Bromley, counsel N O ' Hats fourney for IBM,in a letter addressed to the court.
IBM took an appeal from Pretrial Jrder stated "I have respectfully concluded that No. 3 to the United States Court of Ap- I should not produce the documents (cov-peals for the Second Circuit under 23 ered by Pretrial Order No. 3) unless and U. S. C. I 1291, and concurrently 61ed a until it has been nnally determir.ed that petition for a writ of mandamus under 28 they should be produced." The record of U. S. C. I 1651. On December 19,1972, a proceedings in this court is 611ed with sim-
- At that time there were 1175 documents in Distrtet of New Yoric. No. 72-16st. De United question. It la the court's understanding that States has Sted its response in eacts of these since that time, after additional review. 1B51 cases and they are currently pending in the has produced a large number of these docu- Supreme Court.
ments to (for] the Government and that, pres. :On my 13. the United States moved the entiv. only some 100 documents remain in Issue. Court of Appeals for immediate issuance of
' IBM haa subsequently filed a petttlon for its rnandate, and on May 24. IBM countered uvtt of certlorsrt tn the tlnited States Court with an application for a stav of the mandate.
of Appeals for the Second Circuit. No. 72-t682. By orders dated June 20. 1373. the Court of and a petition for estraordinary writ to the Appeals denied both motions as moot.
(*ntted States Distrtet Court for the Southern
'J 74,832 @ 1973, Commerce Clearing House,Inc.
-w-
as s 12.rs Cited 1973-2 Trade Cases 94,791 U. S. v. !BM ilar references, made by counsel for de. contempt, and suggested a fine of $100 fendant
- per day, which penalty would be stayed On' June 23, the court, at the request pending the diligent prosecution of an of the United States, entered its order to *PP**I* @
- June 23,1973. pp. 40-41.) At show cause why IBM should not be found no time dun.ng argument, did counsel for in civil contempts for its failure to comply defendant take issue with the fact of IBM with Pretrial Order No. 3. On June 28. the n nc mpliance with Pretrial Order ho. a,s.
returtt date c,f that order, the court-heard By order dated July 3,1973. the court argument-from counsel on the question of ordered a hearing pursuant to Local. Civil contertipt *Mr. Rifkind, on behalf of IB\f, Rule 14(b),. scheduled for July,16. The requested *that a hearing be held'pursuas.t hearing"was " limited to the issues of the to Local Civil Rule 14(bh on the issue of fine and damages to be assessed against IBM's contempt and the damages thereby defendant for its alleged contempt of this occasioned.' He also suggested .thzet Mr. court's order, Pretrial Order No. 5. . .""
BromleyPeounsel. for4 IBM #be theid 'in SubsequentinIBM sought discovery against
- Mr. Bromley: May it please the Court, the 14 of -the Federal Lom1 Court Rutas for documenta covered by Pretrial OrF No. 5 are thir Southern Distrtet of New Yortr. would in mr passession. It is my doct g i and that and hereby do put in issue their
- alleged of my . partners that they sha,d , not be produced. misconduct
- i and 'the damages - thereby occasioned *." .
. IBM's. Instructions to us are ther should do '*The order of July 3. 1973 provides as with "Je documents whatever is required by follows:- . ..
the law. If in our optalon. under"the-law as . . . . . . -
It Appearingf that by Order' dated ' June 13.
fina!!T. determined they should be produced. 17*3. the Suprer.e Court denied t!te applice-they wtif - be.
If in our opinion- under the tion by defendant International' Business Ma-law an anally determined they should not be chines Corp. (IBM) for a stay of Pretrial produced, they should not be produced. (Tr. Order No. 5 and the mandate of the Court of June 28.1973. p. 211. Appeals for the Second Circuit. and that since The Court: Can we say fairly that it is also fullthat forcedate andPretrial effect. Order No. 5 has been -in and it further a matter of record that piled with Pretrial Order No.57IBM has not com. Appearing that IBM has not complied with Mr. Rifkind: I think it is a. matter of has the notterms of Pretrial Order No. 5 in that it produced to the plaintle the docu-record that IBM has wtthheld a large number ments which it is required to produce under of documents which were embraced within the terms of that order, and it further Pretrial Order No. 5. 'Ihose papers are. as Appearing - that by order to show cause I have said. In the possession of counsel for dated June 25. 1773. the plaintiff has sought IBM. Messrs. Cravath. Saine [stel & Moore, an order adjudstag IBM in elvtl contempt of and a large number of them-some have been this court for its failure to comp!v with Pre-delivered. as indicated this morning by Mr. trial Order No. 5. and that on June .:8.1773.
Carlsorw.a considerable number have been the return date of that order to show cause.
withneld and are still In the custody of IBM's defendant did not controvert the facts alleged counsel. Messrs. Cravath. Swaine & Moore, for in plaintiff's motion papers, and it further the purpose of testing the ult!rnate and anal Appeartrig that IBM has requested a hear.
validity of Pretrial Order No. 5. (Tr. July ing pursuant to Local Chil- Rule.14(b). It is 18.19T3. pp. 4346). hereby Ordered that a hearing. pursuant to Lom!
l The only uncontroverted fact of sign 16cance Civil Rule 1Hb) shall be held in this court,
( was that IBM's attorneys had not produced commencing on June it.17r3 at 11:00 a. m..
some of the documents covered by Pretrial limited to the issues of the one and damages Order No. 5 to the Department. (Memoren. to be asseemed against defendant for its al.
dum for IBM and its Attorneys. July 11. 1973. tered contempt of this court's order. Pretrtal
- p. St.
' But tf your Honor sees it the way coun- Order No. 5. and it is further Ordered that not later than the close of MI for the Government has said that. Indeed, business on July 11,17T3. counsel for plaintt2 we will have to have recourse to Rule 14. not and defendant shall serve upon opposing only with respect to the issue of damages. but counsel and ale with the court the following with respect to the issue of contempt itself documents:
because this is a mntempt whlen is not a (D Proposed findings pursuant to Local contumacious one. If I may [say) something Civil Rule 14(c):
whlrh sounds 111ogical.** (Tr June 25, 17f3. (2) Hearing memorandum:
- p. 42).
- * * (3) List of all witnennes who are to be cailed to testify at the hearing: and The same request appears at oms- 2 of (4) Sequenttaile numbered inst of als docu-IBM's Response to Order to Show Cause. sub. ments which wtll be introduced at the hear.
mitted June 25.17t1 ing, containing a summary of contents and a rn the event that the covernment press,s statement of the issue to which each document for the ettesshe amounts suggested in its relates. toeether with a copy of each such memorandum wPtch are designed to frus- document. and it is further trate appeal or f abandoning the positten it Ordered that not later than the close of took in the Second Circuit and the Supreme business on JuJP 11. 17T3. counsel for the Court > dose not support art appeniabie order. partles shall submit for the court's consid-then Cravath, and IBM. pursuant to Rule erstion a stipulatton of facts not in etspute.
- Trade Regulation Reports 1 74,532 l
i
94,792 Court Decisions as s.iws U. S. v. [2Si the Justice Department with regard to the IM7 Taaos Cast.s 157,54], 330 U. S. 258, damages allegedly -caused by its failure 303-04 (1947). Defendant will not be prei-to comply with Pretrial Order No. 5. After udiced, with regard to the question of a hearing on the - Justice Department's damages, because the hearing on that ques-application for a protective order, the court tion was severed from the hearing on the ruled, on July 10,.that IBM be permitted coercive fine.
certain discovery on the question of dam- ,.-IBM's claim that it is entitled to a hear-ages. The court also severed the question -
gog under Rule 14(b) on the question of of damages from.the , hearing scheduled its " alleged misconduct," is similnly with-for July 16..so,that this discovery wouId i not out merit. The rule provides that "If the d,elay the; hearing on the issue 'of alleged contemnor puts in issue his alleged misconduct . . . he shall upon demand On July.166.the court conducted a hear- therefor, be entitled to have oral evidence ing under LocahCivil Rule 14(b), as limited taken , thereon. . . ."a However, the mere by the ordervofJJuly 3 and July 10..sThe assertion that defendant places his " alleged United Statescintroduced evidence as to- ~ misconduct" in issue, is not enough to in-the financial condition of IBM. Speci6cally, voke the provisions of the rule. Where, as a copy of IBWs' Annual Report for 1972 here, the defendant has admitted di the was introduced 4 IBM presented no evidence facts necessary for the determinuion of at the hearingc, , ,
Q the fact of contempt, the court will not The defendNt l'ui.s objected to the court's permit it to employ the. rule for purposes decisions, (Il to'! eliminate the question of of delay and obfuscation. .
its " alleged misconduct" from the July 16 In its response to the Government's order hearing, and (2) to postpone consideration to show cause, IBM set out the issues re-of the question of damages, while proceed- lating to its alleged misconduct that it ing with the hearing on the question of sought to raise. Even the most cursory a fine. (Tr. July 16,1973, p. 30). With re- examinatiors of these two " issues," set out gard to the question of damages, the court in the margin,' reveals that the first is agrees with defendant that an award of addressed to the question of relief, and damages to the Government can only be the second is, in effect, an attempt to re-ordered after a full hearing, at which de- argue the merits of the underlying order.
fendant is given;an opportunity to rebut Nowhere in this or any other document, whatever evidence is adduced by the United has IBM denied the factual assertions, made States. However,.the issue of a coercive by the United States, which are the basis fine, surficienr? to-compel compliance with for its prayer that IBM be held in contemr t the court's order,'is wholly separate from of court. Defendant's assertion that it has the question of damages. See, United States placed its alleged misconduct in issue can-
- v. United 3 fine Workers of America [1946- not create issues of fact, where none exist.
- The order of July 10 19"3 provides as "If future proceedings on this issue follows: ~ --
[IBat's need for discovery] Indiate to the l
- 1. The motion for a protectin order and court that oral depositions are in the inter
- 1 other tellet filed by the United States on est of Justice, then, on a proper application Ju!y 9.1973 is granted only to the extent that by IBat. such depositions will be permitted."
the depnsition of the Antitrust Division. De- '1. Whether the disobedience by IBM coun-partrient of Justice. noticed for July 11.1Ff3 set in openly and respectruity refusing to shalt not zo forward and the subpoena duces produce prtvileged documents in order to elicit s tecum addressed to the Antstrust Divtston, a contempt citation which would maxe avail-Department of Justice. Issued from this court able prompt appellate ravlew warrants more )
on July 6.1973 is quasned. than token sanctions. 1
- 2. Defendant is stven leave to propound 2. Whether events occurring sinw the Order i nartn*ly focused interrogatortes and request requiring pteductiort of the privileged docu. '
for documents addressed spectitcally to the ments demonstrate that the Order snould be ime of darnages to the United States oc. withdrawn because:
enioned by defendant's failure to comply with tal The production made "In response ti i
this court's Pretria10rder No. 5. the procesa of another federal court" satt
- 3. That part of the hearing previously claimed to be a waiver was involuntary.
scheduled for July 16 wh6ch relates to this inevitable. made without opporturuty to ,
quat 9n af damares is adjourned pending claim the pnvilege and compelled errerie- l cWieuon of the discovery referred to in 2 ously: and !
abosa (b) Government counsel's agreements, a.W
- 4. The hearing scheduled for July 16 shall concesmons made since entry or tne Order, e farward on the issue of a nae to be preclude it from claiming waiver.
whsed aesinst defendant to insure compli- Response to Order to Show Cause tkled June ana utth Pretrial Order No. 5. 28. IM3, p. 3.
Th+ court's memorandum accompanying this ~
order. provided, at page 4:
5 74,632 @ 1973, Commerce Clearing House,Inc.
l
\
4 I
i es s W3 Cited 1973-2 Trade Cases 94,733 U. S. v. lBM If defendant's claim is that the admitted by coercing flie defendant to do what he facts do not warrant the court's imposition had refared to do. The decree in such of a sanction against IBM, then a legal cases is that the defendant stand com-question is presented, not a factual one, mitted unless and until he performs the Counsel for IBM argued that point at the a atm act , required by the court's
- ' I**N**'* *d hearing held in this court on June 28, the return date of the Government's order to 221 U. S. at 441-42. See M? Comb v. Jackl show cause. The assertion of that proposi- #8"rille Paper Co.,336 U. S.187,191 (1949);
tion does not, however, create an issue as to IBM's alleged misconduct which could 1947 U*i.d TaADE Stofts v. i United CAsrs 57,544], 330 Mint Workers U. S. 25El (1946-
' properly be the subjectrofian: evidentiary. 303 04 (1947) United Stater v- Ross; 243
- - hearing. F. Supp. 496,499 -(S. D. N. Y.'1965). Since MA
., N' m e.'c '"' the court's objective in this ' case is to
.. y3,,, y, g,, ' " "~'
' ~ -
force compliance with its order, (Pretrial the authorities ' cited' above
- IBM's Failure to Comply with Pretrial m _ Order require No. ~that'5),'e th finding' here be
- of dvil,
^
. Order Nor40, t&wi -:" Jand-fse of criminal, contempt. While the
~ '
, ?Eis unco' testedYha't'n IBM'Ita's'faileaM distinction between the *wo forms of con-
- con, ply with Pretrial Order No. SL Ap. tempts have not always- been made crystal proximately 700 of the documents, identified clear," two considerations; lead to the con.
in that order, have not-been produced to clusion that a finding of civil contempt is the Government. While: counsel for IBM the-appropriate remedy in this. case. First, have asserted that this: court erred in enter - as noted above. the purpose of the pro; ing that order, it remains in full force and posed sanction is remedial, to coerce com-cffect. Applications to stay its irnplementa. pliance with the court's order, and not tion; made to this court, the Court of Ap- punitive. Second, the proposed. sanction is peals, and the Supreme Court, have been contingent in nature and defendant will denied. Counsel for IBM:have admitted be given the opportunity to purge itself that the documents are in their possession, of the contempt by complying with Pre-and, therefore, IBM has the power to empty trial Order No. 3.
with the order. Accordinglypthe failure to produce the documents constitutes a con- N A"#""'ys and CEints tempt of court. Having concluded that civil contempt is the proper remedy to be imposed for viola-Civilmd Criminal Contempt '
"',* tion 'of Pretrial Order No. 3, the court
'It remains for the court to- conside: "". consider IBM's argument that the sanction sh uld run against Messrse Cravath, whether IBM's failure to comply with 3"*i"* A M* " **^**I'" U E IB M **"~
Pretrial 0-der No. 5 constitutes a civil or tends that by pu'rsuing this course of action, a crumnal contempt. In the leading case
- C"" **" "* the stage for an munediate of Compers v. Bucks Store- & Rong, Co., appeal which will test the merits of Pre- .
221 U. S. 418 (1911), the Supreme Court trial Order No. a. While the court agrees set'out th.e basic guidelines -
for resoiving with counsel for derendant that the legal I.
"",estion. question presenteo by Pretrial Order No.
It 'is not the fact of puni-hment but 5 is of significant interest, it does not rather of its character and purpose that conclude that this should affect its decisien often serve to distinguish between the in framing an appropriate contempt order.
two classes contempt] If itofiscases.
for civil(ctvil and criminal contempt the Absent a formal certification under 23 punishment is remedial, and for the bene- U. S. C. $ 1292(b), it is not proper for th,e 6: of the complainant. But if it is for district court to enter an order which is criminal contempt the sentence is puni. designed to either thwart or promote an tive, to vindicate the authority of the interlocutory appeal. The decision as to court. . . . But imprisonment for civil the appealability of an order of the district contempt is ordered where the, defendant court is a matter properly to be decided has refused to do an ar,rmative act re-by the court of appeals. The district court quired by the provisions of an order can, and should, do no more than frame which, either in form or substance, was msndatory in its character. Imprison- an order which .it believes to be proper ment in such cases is not inflicted as a na he circumstances of the case before it.
punishment, but i.t ien&d to be remedial Tnus, this court rejects IBM's assertion
" Dobbs. Co= resent of Court: A S w ory, SE Corn. l Jtem tgL 2H 49 (17"1).
Trade Regulation Reports T 74,832
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94,794 Court Decisions as s.u.r U. S. v. lBM i
that it'should consider the question of least in form, was subject to the jurisdic-appealability in shaping its contempt order. tion of the court in his capacity as a sworn Pretrial Order No. 5 requires that "lBM witness. Neither of these considerations immediately deliver to plaintiff, in the apply m the case before this court. Pre-form provided to Control Data Corpora- trial Order ho. a is addressed to the de-tion a, copy of each document withheld fendant, IBM, not to counsel,; and a fine is andfexercised by it from the said micro- tmed against the corporation is, in the filmliJ.'(emphasis added) In ~the clear- csanctim. urt's view, a meaningful and. effective est of. terms, the order requires that IBM, .
the defendant, perform certain acts. There .
is no requirement that Cravath, Swaine & How Mach is Enought Mooie' produce any documents to the Gov- From the foregoing, the court has con-ernment.'"While it is true' that. a corpora- cluded that defendant IBM should be ad-
~
tion can only act through its agents, the judged in civil contempt and a fine should duty which the order imposes, and the be levied against it to coerce compliance sanctions for failure to comply, run against with Pretrial Order No. 5. The final ques-the corporation. tion presented. is the size and shape of the Mr.,Bromley, counsel for' IBM has as. fine to be imposed. _
serted that "the documents covered . bY At the- oursee it must be admitted that<
pretrial order No. 5 are in my possession. except for the numerologist, none can say It is my decision that that of my partners with precision that there is any one amount that they should not be produced." (Tr. which is the only proper fine under these June 28,1973, p. 21.) However,it is settled circumstances. Were this an assessment of that reliance on the advice of counsel is damages, the court could conndently rely not a defense to an act of civil contempt. on established methods of judicially deter-Bigelow v.-RKO Radio Picturc [1948-lM9 mining the appropriate sanction. But with Taaoe Cases 7 62,242], 78 F. Supp. 250, 238 regard to this coercive 6ne, the court can (N. D. IIL), aff'd [1948-1949 TaAce cases only rely on its best judgment of the
!62,328],170 F. 2d 783 (7thr Cir.1948); minimum amount which is sufficient to see, United States t. Goldfarb,167 F. 2d 735 compet. defendant to comply with Pretrial (2d Cir.1948). The assertion of counsel. Order Nou 5.
that he is in possession of the documents.
production of which is required by Pretrial . It should be observed that in deter. min.-
Order No. 5, is not sufficient to transfer mg the amount is ,
the duty imposed by the order- from the proper to take mto , of a coercive account the fine it contem-client to his attorney. n r's financial res urces and ability to pay.
United States t'. United Stineworkers of Cases such as Attral of the United Starts America (1946-1947 TaAce Cases T 57,344),
Securitws and Exchangr Commusion, 226 33n y, g, 35g, 303 04 g19473 : 5,,,ga,r, z.,
F. 2d 301 (6th Cir.1955) do not bear on g,,ff,, lac., 299 F. Supp. 572, 579 (E. D.
this question. There, the district court 1[o. 1969). At the July 16 hearing, the believed, albeit erroneously, that the Secu- Government introduced a copy of IBM's rities and Exchange Commission was re- 1972 Annual Report which purports to set quired to produce certain documents to,a out the financial position of the corpora-prwate plaintiff m a pendmg civil suit. tion. IBM has not contested the accuracy When the SEC, through its agents, failed of these 6gures. It reveals that IBM's net to comply with the court's request, the earnings for 1972 were $1,279,267,555 as court committed the Commission's Gen
- against $1,078,846.907 for 1971. The stock-
- eral Counsel? who had been sworn as a holders' equity as of December 31,1972 is
- witness, to the custody of the United States reported as $7,565.894,S47.
l liarshal. In that proceeding, there was no meaningful way in which the SEC could Based on this information and the court's have been held in contempt, except by belici that a substantial fine is required applying the sanction to one of its agents. to insure compliance with its order, a fine The concept of nning the Commission is, of $150.000 per day nill be levied against of course, an empty one. In addition, the IBM for each day, after a date certain as order of the court was addressed to the set forth in the order ac.ompanying this General Counsel as an individual, who, at opinion. that it fails to produce to plaintiff u That General Council. The Honorable Wittlam H. Timtiers now senes as a member nt nur Court or Appeals.
5 74,632 @ IM3, Commerce Clearing House Inc.
/
as s.ts rs Cited 1973-2 Trade Cases 94,795 U. S. v. WoM Shor Co.
the documents which are the subject of States against IBM in the above captioned Pretrial Order No. 5. ~ The imposition of case on January 17,1969:
this fine shall be contingent on IBM's 3.On September 26, 1972, this court compliance with the order, and no fine issued Pretrial- Order No. 5 in this action, shall be imposed for the day on whicts which required IBY to immediately deliver IBM produces the documents, or for any certain identified dociments to plaintiff:
day thereafter.i 4. By Order dated June 13, 1973, the W!wre Art Ws Coingt-Supreme Court denied IBM's application for a stay of Pretrial Order Nos 5, as well The Iitigation surrou%. Pretrial Order as IBM's application for a stay of the man-ho. 5 ,in this court ce Court or Appeals, date of the Court of Appeals for the Second and the Supreme Court has required the Circuit.
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J-expenditure of substantial resources by loth - "* "
the parties and thei judiciary. Three ac- ~5. Since. that date Pretrial Order No. 5 tions are currently pending in the Supreme has been in full force and effect. ^
Court and it seems likely that further 6. On June 25,1973, at the request'of.the energies will be expended. i n. United States, this^ court entered ~its Order While all counsel' owe v an' obligatiota to m requiring IBM to sh'ow cause why it should their clients"and tfie rc^ourt' to' pursue-all not be found in civil contempt for its failure legal and ethical?'avemies to protect the to comply with Pretrial Order No. 5..
rights and interest of those clients,;none- 7. IBM, through its counsel, Messrs. Cra-should lose sight of the ultimate objective vath, Swaine & Moore, is able to produce toward which court. and counsel should to the United States- the documents which strive: the prompt resolution of the 'alle- it is required to produce under Pretrial gations contained in the complaint. The Order No. 5, and the United States has duly court's efforts are directed toward this end, requested of IBM that it comply with Pre-and it is hoped that this objective is shared trial Order No. 5 by producing to ,the United States the documents it is reqmred by counsel.. Peripheral issues, of whatever import, should not lead us to lose sight t produce under said Order.
of this basic objective. 8. IBM has not complied with the terms of Pretrial Order No. 5, in that it has not Findings of Fact
- produced to the plaintiff the documents
- 1. International Business Machines Cor which it is required to produce;under the terms of Pretrial Order Nos 5.
poration (IBM) has-offices, transacts bus.- i-l e'9. IBM has, through its attorneys, stated ness and is found within .the Southern I District of New York; i r the record in this case that it dechnes to produce the documents which it is re-
- 2. This court has jurisdiction over this quired to produce under the terms of Pre-matter under a complaint filed by the United trial Order No. 5. l
[7 74,633] United States v. Wohl Shoe Co., Nordstrom's Albuquerque, Inc., Paris Shoe Stores, and Penobecot Shoe Co.
U. S. District Court, District of New Mexico. Civil Action No. 9187. Filed, but not entered August 1,1973.
Case No.2193 Antitrust Division, Department of Justice. I Sherman Act Resale Price Fixing-Shoes-Consent Decree.-A shoe company would be prohibited j by a consent decree from selling to retailers on condition that they adhere to suggested resale prices or compelling them to adopt any minimum or suggested retail price or markup: from selling to any retail dealer because it adheres to a particular price or markup or refusing to sell because the dealer does not adhere; and from informing or implying to any retail dealer who has complained or reported price cutting or adver-tising below prices charged by competitors that the company will take action to obtain compliance. For five years, in the event the company receives complaints from retailers, it must advise the complaining retailers that it cannot enforce any retail prices. See f 4770.
Trade Regulation Repoets 1 74.833
1 e . .
8-7-73 (ATRR)
A-1
(.1o. 625)
ATTACHMENT 2 L a NEWS & COMMENT IBM FINED $150,000 PER DAY FOR DOCUMENT REFUSAL; ORDER STAYED BY SECOND CIRCUIT The procedural struggle between IBM and the Government continues. IBM's refusal toproduce allegedlyprivileged documents has resulted in'a civil contempt order and fines in the amount of $150,000 per day. The penalty is stayed, however, by Judge William H.
Mulligan, of the U.S. Court of Appeals for the Second Circuit, pending an August 8th hear-ing. (U.S. v. IBM, SDNY, 8/2/73)
On September 26, 1972, Chief Judge David N. Edelstein, of the U.S. District Court for Southern New York, ordered IBM to deliver to the Government documents previously with-held on the ground that they were protected by the attorney-client privilege. The documents previously had been surrendered in private litigation to the Control Data Corporation due to claimed inadvertence on IBM's part. In surrendering the documents, Judge Edelstein ruled, IBM syaived its privilege. However, he stayed implementation of the pretrial order to enable IBM to seek appellate review.
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IBM took an appeal from the order, but ultimately was rebuffed as an en banc U.S.
Court of Appeals for the Second Circuit dismissed both the appeal and the concurrently filed petition for a writ of mandamus. (594 ATRR A-1, 615 ATRR A-6)
During the pendency of these appellate proceedings, IBM filed a " protective" Notice of Appeal to the Supreme Court from Judge Edelstein's pretrial order. On June 13, the Supreme Court issued an order refusing to stay the order and the mandate of the appellate court.
On July 16, Judge Edelstein held a hearing " limited to the issues of the fines and dam-
, ages to be assessed against the defendant for its alleged contempt of this court's order *"."
IBM objected to Judge Edelstein's elimination of the question of its "allwed misconduct" from the hearing and disputed his decision to postpone consideration of the question of damages while simultaneously proceeding with the hearing on the question of a fine. IBM suggested that its counsel should be held in contempt and fined $100 per day, which would be stayed pending the " diligent" prosecution of an appeal.
While Judge Edelstein agreed with IBM that an award of-damages to the Government could only be ordered after a full hearing, he found that the issue of a coercive fine " sufficient to compel compliance with the court's order, is wholly separate from the question of damages. "
Therefore, defendant will not be prejudiced as to the question of damages, he reasoned, since the hearing on that question was severed from the hearing on the coercive fine.
Furthermore, IBM's claim that it is entitled to a hearing on the question of its alleged misconduct was held to be "without merit," since it had admitted all the facts necessary for a determination of the contempt issue. Judge Edelstein determined that he would not permit IBM to employ procedural rules "for purposes of delay and obfuscation. "
IBM admited that the oric .ed documents were in its possession so that it had the power
- o comply with the pretrial order. Accordingly, Judge Edelstein found that the failure to pro-luce the documents constituted acontempt of court. Since the purpose of the proposed sanction s remedial, and not punitive, he held that a finding of civil, and not criminal, contempt is he appropriate remedy. In addition, Judge Edelstein rejected IBM's assertion that he should
- onsider the question of appealability in framing an appropriate contempt order.
Pubhshed by THE BUREAU OF NAT!oNAL AFFAIRS. INC. WASHINGTON. D.C. 20037 flight of eeproducteen and redastribussen re served
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i UNITED STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of )-
) Docket Nos. 50-329A CONSUMERS POWER COMPANY ) and 50-330A (Midland Units 1 and 2) )
CERTIFICATE OF SERVICE I hereby certify that copies of APPLICANT'S MOTION TO RECONSIDER BROAD RULING CONCERNING INSPECTION OF PRIVILEGED DOCUMENTS, dated August 21, 1973, in the above-captioned matter have been served on the following by deposit in the United States mail, first class or air mail, this 21st day of August, 1973:
Jerome Garfinkel, Esq., Chairman Dr. J. V. Leeds, Jr.
Atomic Safety and Licensing Board P. O. Box 941 Atomic Energy Commission Houston, Texas 77001 Washington, D. C. 20545 William T. Clabault, Esq.
Hugh K. Clark, Esq. Joseph J. Saunders, Esq.
P. O. Box 127A David A. Leckie, Esq.
Kennedyville, Maryland 21645 Public Counsel Section Antitrust Division James Carl Pollock, Esquire Department of Justice 2600 Virginia Avenue, N. W. Washington, D. C. 20530 Washington, D. C. 20037 Joseph Rutberg, Jr., Esq.
Ant'itrust Counsel for AEC Regulatory Staff Atomic Energy Commission Washington, D. C. 20545 Walla:e E. Brand, Esq.
Antitrust Public Counsel Section P. O. Box 7513 Washington, D. C. 20044 Atomic Safety and Licensing Board Atomic Energy Commission Washington, D. C. 20545 Keith S. Watson
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