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08 07 2012 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES
 

) 

In the Matter of ) PUBLIC 

) 

McWANE, INC., ) DOCKET NO. 9351 

Respondent. ) 

__________________________________________) 

COMPLAINT COUNSEL’S OPPOSITION TO 

RESPONDENT MCWANE, INC.’S MOTION TO AMEND THE 

PROTECTIVE ORDER GOVERNING DISCOVERY 

Respondent McWane, Inc.’s Motion to Amend the Protective Order Governing 

Discovery should be denied.1

 The relief that Respondent seeks – in-house counsel access 

to confidential third-party material – is directly contrary to Commission Rule 3.31(d), and 

was considered and rejected by the Commission during the public rulemaking process 

that preceded the 2009 revisions to the Commission’s Rules of Practice. More generally, 

in order to expedite proceedings, achieve uniformity across cases, and instill confidence 

in third parties that their confidential information will be protected, the Commission has 

declined to contemplate any deviation from the standard protective order terms set forth 

in the Rules. Granting Respondent’s motion would upset the legitimate expectations of 

third parties that have provided discovery, undermine the confidence of those from whom 

information is sought in future investigations and adjudicative proceedings, and violate 

the terms and intent of Rule 3.31(d). 

1

 Respondent’s Motion incorrectly suggests (Mot. at 1, n.1) that Complaint Counsel does 

not take a position with respect to the Motion. Apparently, Respondent’s counsel 

misunderstood Complaint Counsel’s comment during informal discussions that he 

understood their position, but that the motion may be premature or moot (see note 4, 

infra), and that in any event, there was not much Complaint Counsel could do if third 

parties wanted to keep their information confidential. For the reasons stated herein, 

Complaint Counsel opposes Respondent’s Motion. 
Background 

During this proceeding and the investigation that preceded it, dozens of third 

parties produced competitively sensitive information in response to compulsory process. 

For example, Complaint Counsel’s Preliminary Witness List sets forth over 25 entities – 

including foundries, pipe and fitting manufacturers, and distributors – each of which 

provided information in response to one or more subpoenas that sought competitively 

sensitive information, such as strategic planning documents; pricing plans, policies, and 

data; analyses of competition and competitors; production cost information; and detailed 

transaction data. 

These third parties received subpoenas with an attached copy of the protective 

order, and provided responsive information (and elected not to move to quash subpoenas 

or seek other relief) knowing that the information designated by them as “confidential” 

would be treated in accordance with the standard protective order mandated by Rule 

3.31(d) and issued, verbatim, in this case. See Jan. 5, 2012 Protective Order Governing 

Discovery Material; Rule 3.31(d). Respondent now seeks to modify the terms of that 

protective order to permit its in-house counsel to access third-party confidential 

information. 

Argument 

A. The Text of Rule 3.31(d) Does Not Allow In-House Counsel Access to 

Third-Party Confidential Information 

Rule 3.31(d), as amended, is clear. It requires the Administrative Law Judge to 

automatically and routinely enter a standard form protective order in every case. 16 

C.F.R. 3.31(d) (effective May 1, 2009) (“In order to protect the parties and third parties 

against improper use and disclosure of confidential information, the Administrative Law 

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Judge shall issue a protective order as set forth in the appendix to this section.”) 

(emphasis added). This standard protective order provides that confidential information 

shall not be disclosed to a respondent’s in-house counsel. See Rule 3.31(d) app. § 7(c), 

(d) (excluding employees of a respondent from the categories of people to whom 

confidential information may be disclosed). The Rule does not contemplate or permit the 

individualized tailoring of protective orders to allow in-house counsel access to thirdparty confidential information in a particular case. Complaint Counsel knows of no 

instance, and Respondent cites none in its brief, in which in-house counsel has been 

granted access to confidential third-party materials under the current version of Rule 

3.31(d). Cf. Motion at 3 (citing cases from before the amendment of Rule 3.31). A 

straightforward reading of the Rule thus compels denial of Respondent’s Motion.2 

B. Rule 3.31(d) Reflects a Policy Determination that In-House Counsel 

Should Not Have Access to Third-Party Confidential Information
 

Although the Court need not look beyond the clear text of Rule 3.31(d) to deny 

Respondent’s motion, Commission rulemaking commentary further confirms that Rule 

3.31(d) was specifically amended to prohibit disclosure to in-house counsel. In its 2008­

2009 rulemaking proceedings, the Commission considered the question of in-house 

counsel access to confidential information in response to a comment submitted by the 

Section of Antitrust Law of the American Bar Association. Much as Respondent does 

here, the Antitrust Section suggested that prohibiting disclosure of confidential discovery 

materials to a respondent’s in-house counsel might “inhibit a respondent’s ability to 

defend itself.” See FTC Rules of Practice, Interim Rules with Request for Comment, 74 

2

 In fact, in light of the mandatory nature of the regulation requiring a standard protective 

order, it appears unclear whether even the Commission would have the authority to grant 

the relief sought by Respondent without first engaging in appropriate rulemaking 

procedures. 

3
 
 

Fed. Reg. 1804, 1812 (Jan. 13, 2009) (“Interim Rules”) (responding to comments and 

proposing amendments to 16 C.F.R. Parts 3 and 4). The Commission carefully 

considered this comment, weighed it against the Commission’s own statutory 

confidentiality obligations, and concluded that, as a policy matter, protective orders in 

Part 3 proceedings should not permit in-house counsel access to confidential information: 

The Commission’s statutory obligation to maintain the 

confidentiality of commercially sensitive information, 

however, raises serious questions about the wisdom of 

allowing disclosure of information in its custody to inhouse counsel, who might intentionally or unintentionally 

use it for purposes other than assisting in respondent’s 

representation, for example, by making or giving advice 

about the company’s business decisions. The Commission 

believes it is not sound policy to allow third party 

competitively sensitive information to be delivered to 

people who are in a position to misuse such information, 

even if inadvertently. 

Id. at 1812-13 (footnotes omitted). Thus, in amending Rule 3.31(d), the Commission has 

already considered and rejected Respondent’s arguments.3 

As addressed further below, the in-house counsel exclusion applies in every case, 

but it bears noting that, based on the facts recited in his declaration, Respondent’s 

General Counsel (Mr. Proctor) plays exactly the sort of role within Respondent’s 

business that the Commission viewed as most warranting this protection. The 

Commission was concerned about the potential for inadvertent misuse of information by 

counsel who engage in “giving advice about the company’s business decisions.” Id. Mr. 

Proctor admits to playing just such a role – providing legal advice in connection with 

numerous areas of Respondent’s business, including, among many others, “competitive 

3

 Additionally, providing in-house counsel with access to competitively sensitive 

information about their principle competitors raises particularly acute competitive 

concerns when, as here, the respondent is charged with colluding with those competitors. 

4
 
practices,” and the negotiation of contracts with competitors. See Proctor Decl. at 2-3 

¶¶ 3-5. The relief Respondent seeks is thus directly contrary to the expressed intent of 

the Commission. 

C. Rule 3.31(d) Reflects a Policy Determination that the Protections 

Afforded to Third Parties by Rule 3.31(d) are Mandatory 

In its rulemaking process, the Commission also made it clear that protective order 

terms should not be subject to case-by-case modifications. When it first proposed an 

amended Rule 3.31(d), requiring a standard protective order, the Commission stated its 

rationale as follows: 

The Commission believes a standard order would eliminate 

the delay resulting from negotiations and disputes over 

case-specific orders and improve quality and reduce agency 

costs by ensuring that discovery materials are handled 

uniformly and in a manner that is fully consistent with the 

FTC’s statutory obligations with respect to materials it 

receives from private parties. 

FTC Proposed Rule Amendments with Request for Comment, 73 Fed. Reg. 58,832, 

58,838 (Oct. 7, 2008). In its comments to the proposed amendments, the Antitrust 

Section suggested that parties should be able to negotiate orders “suited to the needs of 

the particular case.” Interim Rules, 74 Fed. Reg. at 1812. In rejecting this comment, the 

Commission elaborated on its rationale, and concluded that individualized negotiations 

would undermine important interests in efficiency, uniformity, and protection of thirdparty expectations: 

[Negotiations] can substantially delay discovery, prevent 

the Commission from protecting confidential material in a 

uniform manner in all Part 3 cases, and reduce the 

confidence of third party submitters that their confidential 

submissions will be protected. 

5
 
 

Id.4 

These policy considerations independently mandate denial of Respondent’s 

motion. Most immediately, it would be unfair to the third parties in this case to change 

the rules in the middle of the game. Those parties produced documents during the 

investigation and adjudicative phases of this case – and elected not to seek further 

protection or relief from the Court – with the expectation that the dissemination of their 

discovery would be limited to the categories of people named in the standard protective 

order. 

Additionally, granting Respondent’s motion would impair Commission 

investigations and party discovery in future cases and defeat the very purpose of the 2009 

rulemaking. There can be little doubt that the prospect of disclosure of sensitive 

materials to an adversary can “have a chilling effect on the parties’ willingness to provide 

confidential information essential to the Commission’s fact-finding processes.” Akzo 

N.V. v. ITC, 808, F.2d 1471, 1483 (Fed. Cir. 1986) (referring to the International Trade 

Commission). Uncertainty as to the level of protection can have a similar chilling effect, 

and one of the Commission’s reasons for promulgating Rule 3.31(d) was to avoid 

creating situations early in investigations in which third parties “could only guess what 

degree of protection would eventually be afforded their confidential information.” 

Interim Rules, 74 Fed. Reg. at 1813 n.39. Granting the relief sought by Respondent 

4

 Rule 3.31(d) does permit the Administrative Law Judge to put in place additional 

protections for parties from whom discovery is sought, see Rule 3.31(d) (“The 

Administrative Law Judge may also deny discovery or make any other order which 

justice requires to protect a party or other person from annoyance, embarrassment, 

oppression, or undue burden or expense, or to prevent undue delay in the proceeding.”), 

but by its terms, and especially in light of the Commission’s rulemaking commentary, 

this provision cannot be read as opening the door to case-by-case modifications of 

protective orders in a manner that diminishes the protection afforded to third parties. 

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would destroy the certainty third parties need for Commission staff to conduct 

investigations and for all parties take effective discovery in future cases. 

Conclusion 

For the foregoing reasons, Respondent McWane, Inc.’s Motion to Amend the 

Protective Order Governing Discovery should be denied.5 

Dated: August 7, 2012 Respectfully submitted, 

 s/ Joseph Baker 

Edward D. Hassi, Esq. 

Linda Holleran, Esq. 

Joseph R. Baker, Esq. 

Thomas H. Brock, Esq. 

Michael J. Bloom, Esq. 

Jeanine K. Balbach, Esq. 

J. Alexander Ansaldo, Esq. 

Andrew K. Mann, Esq.

 Monica M. Castillo, Esq. 

Counsel Supporting the Complaint 

 Bureau of Competition

 Federal Trade Commission

 Washington, DC 20580 

 Telephone: (202) 326-2470 

 Facsimile: (202) 326-3496 

 Electronic Mail: ehassi@ftc.gov 

5

 The relief sought by Respondent’s Motion may also be largely superfluous if, as 

Complaint Counsel anticipates, the vast majority of third-party material previously 

designated as confidential will not be subjected to in camera treatment and will therefore 

become public when introduced at trial. 

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CERTIFICATE OF SERVICE 

I hereby certify that on August 7, 2012, I filed the foregoing document 

electronically using the FTC’s E-Filing System, which will send notification of such 

filing to: 

Donald S. Clark 

Secretary 

 Federal Trade Commission 

 600 Pennsylvania Ave., NW, Rm. H-113 

 Washington, DC 20580 

 I also certify that I delivered via electronic mail and hand delivery a copy of the 

foregoing document to: 

The Honorable D. Michael Chappell 

 Administrative Law Judge 

 Federal Trade Commission 

 600 Pennsylvania Ave., NW, Rm. H-110 

 Washington, DC 20580 

 I further certify that I delivered via electronic mail a copy of the foregoing 

document to: 

Joseph A. Ostoyich 

William C. Lavery 

Baker Botts L.L.P. 

The Warner 

1299 Pennsylvania Ave., NW 

Washington, DC 20004 

(202) 639-7700 

joseph.ostoyich@bakerbotts.com 

william.lavery@bakerbotts.com 

J. Alan Truitt 

Thomas W. Thagard III 

Maynard Cooper and Gale PC 

1901 Sixth Avenue North 

2400 Regions Harbert Plaza 

Birmingham, AL 35203 

(205) 254-1000 

atruitt@maynardcooper.com 

tthagard@maynardcooper.com 

Counsel for Respondent McWane, Inc. 

8 
 

 

CERTIFICATE FOR ELECTRONIC FILING 

 I certify that the electronic copy sent to the Secretary of the Commission is a true 

and correct copy of the paper original and that I possess a paper original of the signed 

document that is available for review by the parties and the adjudicator. 

August 7, 2012 By: s/ Thomas H. Brock 

Thomas H. Brock 

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