UNITED STATES OF AMERICA 

FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

)


In the Matter of
 ) 

)


McWANE, INC.,
 )
 a corporation, and DOCKET NO. 9351
 ) 

) 

STAR PIPE PRODUCTS, LTD., )
 

a limited partnership,
 )


Respondents.
 ) 

) 

ORDER DENYING RESPONDENT'S MOTION TO EXCLUDE EVIDENCE,
 

OR IN THE ALTERNATIVE, MOTION FOR CONTINUANCE
 

I. 

On August 24,2012, Respondent McWane, Inc. ("Respondent" or "McWane") fied a 

Motion to Exclude Evidence, or in the Alternative, Motion for Continuance ("Motion"). By 

Order dated August 27,2012, Complaint Counsel was ordered to fie an expedited response to 

the Motion. Complaint Counsel fied its Opposition on August 29,2012. Oral argument on the 

Motion was heard at the final prehearng conference in this matter on August 30, 2012, after 

which a ruling was issued from the bench denying Respondent's Motion. This Order details the 

reasoning for that ruling. 

II. 

According to the motion papers, the evidence at issue involves certain price-related 

communications and conduct by and/or among Respondent, Sigma Corporation ("Sigma") and 

Star Pipe Products Ltd. ("Star") that occurred in April 
 2009 and June 2010 (collectively, the 

"Challenged Evidence"). Respondent requests an order excluding the Challenged Evidence, or 

in the alternative, an order granting a 60-day continuance to conduct fact and expert discovery on 

the Challenged Evidence. 

Respondent asserts that the Challenged Evidence constitutes new allegations or claims. 

Furthermore, Respondent contends, it had no notice that Complaint Counsel would rely on 

pricing conduct occurrng in April 
 2009 and June 2010. Respondent argues that the conduct to 

which the Challenged Evidence relates is not alleged in the Complaint, and furthermore, the 

Complaint, the FTC press release accompanying the Complaint, and the complaint issued against 

alleged co-conspirator Sigma, asserted that the alleged conspiracy ended in early 2009. 

Respondent contends it first learned that Complaint Counsel would rely on the Challenged 
Evidence from April 
 2009 when Complaint Counsel cited the evidence in its June 1,2012 

Motion for Partial Summary Decision, and first leared Complaint Counsel would rely on the 

Challenged Evidence from June 2010 when Complaint Counsel referred to that evidence in its 

August 17,2012 Pre-Trial Brief. Accordingly, Respondent states, it did not obtain "full" 

discovery on the April 
 2009 evidence and obtained no discovery on the June 2010 evidence 

during the discovery phase of 
 this case, which terminated June 1,2012. Respondent argues that, 

under these circumstances, admitting the Challenged Evidence at trial would be unfair, 

prejudicial, and a denial of 
 Respondent's due process rights. 

Complaint Counsel responds that the Challenged Evidence shows that in April 
 2009, 

Respondent and Star exchanged mutual assurances that they would adopt the same price list, and 

in June 20 i 0, Respondent and Sigma used letters to customers to "signal" one another about 

price coordination. Complaint Counsel argues that such evidence is directly relevant to the claim 

that Respondent conspired with others to fix prices. 

Complaint Counsel further asserts that Respondent had ample notice regarding the April 

2009 and June 2010 pricing evidence at issue and that Respondent should have filed a motion in 

limine in accordance with the Scheduling Order deadline of July 27,2012. Complaint Counsel 

states that the April 
 2009 communications were first disclosed at a 2011 investigational hearng, 

which was produced to Respondent at the beginning of discovery; that these communications 

were also addressed in testimony at nine depositions taken in this case; that Respondent asked 

questions regarding these communications at the depositions; and that Complaint Counsel cited 

these communications in its June 1,2012 Motion for Partial Summary Decision. As to the June 

2010 evidence, Complaint Counsel states that during discovery it elicited deposition testimony 

on the subject from two deposition witnesses, and that Respondent also took testimony on the 

subject. In addition, Complaint Counsel asserts, Complaint Counsel included the relevant June 

2010 pricing documents and deposition testimony on its pre-trial exhibit list and deposition 

designations, submitted July 6,2012. .
 

Finally, Complaint Counsel notes that the Commission, in its ruling denying Complaint 

Counsel's Motion for Partial Summary Decision, rejected Respondent's notice and due process 

arguments with respect to the April 2009 pricing conduct, holding that the Complaint did not 

allege the conspiracy 
 ended in early 2009; that the Complaint did not have to specifically allege 

each instance of unlawful conduct; that Respondent had actual notice of the April 
 2009 evidence; 

and that Respondent conducted extensive discovery into the April 2009 conduct. 

III. 

A. 

The admissibility of evidence is governed by Rule 3.43 (b), which states in pertinent part: 

(b) Admissibility. Relevant, material, and reliable evidence shall be admitted. Irrelevant, 

immaterial, and unreliable evidence shall be excluded. Evidence, even if relevant, may 

be excluded ifits probative value is substantially outweighed by the danger of unfair 

prejudice, confusion of the issues, or if the evidence would be misleading, or based on 

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considerations of undue delay, waste of 
 time, or needless presentation of cumulative 

evidence. 

16 C.F.R. § 3.43(b). 

This action charges, inter alia, that beginning in January 2008, McWane, with others,
 

"conspired to raise and stabilize" prices, thereby restraining price competition in violation of
 

Section 5 ofthe FTC Act. Complaint irir 29,65. According to Complaint Counsel, the
 

Challenged Evidence is offered to show that in April 
 2009, Respondent and Star exchanged 

mutual assurances that they would adopt the same price list, and in June 2010, Respondent and 

Sigma used letters to customers to "signal" one another about price coordination. Such evidence 

is relevant to whether there was, in fact, a conspiracy to fix prices. Accordingly, the Challenged 

Evidence is relevant. Indeed, Respondent does not argue to the contrary. 

However, even though the Challenged Evidence is relevant, pursuant to Rule 3.43(b), it 

must be further determined whether use of 
 the evidence would be unfair and/or prejudicial, or a 

violation of due process rights, as Respondent argues, because Respondent lacked adequate 

notice. As further explained below, Respondent had sufficient notice of 
 the Challenged 

Evidence and, therefore, the Motion to Exclude is DENIED.l 

B. 

It should be noted at the outset that Respondent does not contend that it had no notice that 

the Challenged Evidence existed, nor does Respondent deny that the parties engaged in at least 

some discovery regarding the Challenged Evidence. Rather, Respondent contends it had 

inadequate notice that Complaint Counsel would rely on the evidence to prove its conspiracy 

charge at trial, and that, therefore, Respondent did not engage in "full" discovery on the April 

2009 evidence and obtained no discovery on the June 2010 evidence. Motion at 1-2, 6-7. In 

support of its claim that Respondent did not receive notice of the Challenged Evidence, 

Respondent relies on the fact that the Complaint does not include any references to the April 

2009 and January 2010 conduct, and therefore, Respondent argues, the Challenged Evidence 

constitutes new allegations presented on the eve of triaL. This argument lacks merit. 

Notwithstanding Respondent's persistent references to the Challenged Evidence as "claims" and 

"allegations," the Challenged Evidence is just that - evidence. The "claim" at issue is whether, 

beginning in January 2008, Respondent conspired to fix prices and thereby unlawfully restrained 

competition. Complaint irir 29,65. 

Respondent's related assertion that it did not engage in full discovery on the Challenged 

Evidence because it believed that conduct occurrng in April 
 2009 and June 2010 was beyond the 

scope ofthe Complaint is similarly unpersuasive. First, contrary to Respondent's assertions, the 

i The fact that Respondent did not seek to exclude the Challenged Evidence by means of a motion in limine by the 

deadline provided under the Scheduling Order is not dispositive in this instance. Given the importance of the notice 

issues raised by Respondent, it is a proper exercise of discretion to address the motion on its merits. See In re N. C. 

Bd. of 
 Dental Examiners, 2011 FTC LEXIS 135, at *7-8 (July 11, 2011) (choosing to address untimely motion for in 

camera treatment of evidence introduced at tral, where respondent asserted that North Carolina state statute bared 

public disclosure of the evidence). 

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Complaint does not allege that the conspiracy "ended" in early 2009.2 Respondent cites 

allegations in the Complaint that the Ductile Iron Fittings Research Association ("DIFRA"), an 

alleged instrument of 
 Respondent's conspiracy, operated between "June 2008 and Januar 

2009," Complaint ir 36, and that the passage of 
 the American Recovery and Reinvestment Act of 2009 ("ARR") "upset the terms of 
 the coordination" among the alleged co-conspirators. Id. ir 

3. The foregoing allegations are not fairly read as alleging that the conspiracy ended in early 

2009. Rather, the Complaint alleges that the conspiracy began in January 2008, and does not 

allege any end date. The cases cited by Respondent for the proposition that fair notice requires 

an allegation as to the "timing" of a conspiracy do not require an allegation of the time or date 

that a conspiracy ended. 

Moreover, the fact that the Complaint refers to certain Januar 2008 and June 2008 price 

increases is not dispositive of what time period is encompassed by the alleged conspiracy. The 

alleged January 2008 and June 2008 price increases are described in the Complaint as "the result 

of' the alleged conspiracy beginning in 2008, and in this regard the alleged 2008 price increases 

constitute examples of acts taken in furtherance of, or demonstrating, that alleged conspiracy. 

Complaint irir 32-34. Similarly, the Challenged Evidence is offered as examples of conduct in 

furtherance of, or demonstrating, such alleged conspiracy. Respondent cites no authority 

supporting the proposition that, in order to provide adequate notice of a conspiracy claim, the 

Complaint must set forth each act taken in furtherance of the alleged conspiracy, or each item of 

evidence that is relevant to demonstrating the alleged conspiracy. Rather, the specific facts and 

documents upon which Complaint Counsel intends to rely to prove the alleged conspiracy 
 are 

more properly subjects for discovery. See Rule 3.31(c)(1) (stating that "parties may obtain 

discovery to the extent that it may be reasonably expected to yield information relevant to the 

allegations of the complaint, to the proposed relief, or to the defenses of any respondent"); see 

also Guilford Natl Bank v. Southern R. Co., 297 F.2d 921, 924 (4th Cir. 1962) (stating that "one 

important purpose of discovery is to disclose all relevant and material evidence before trial in 

order that the trial may be an effective method for arriving at the truth and not 'a battle of 
 wits 

between counseL'" (quoting Hickman v. Taylor, 329 U.S. 495, 516 (1947) (Jackson, J., 

concurrng))). 

With respect to discovery, it appears from the record submitted on the Motion that the 

parties addressed the Challenged Evidence and/or the underlying pricing conduct during 

depositions. Moreover, at oral argument on the instant motion Respondent was asked whether it 

had issued a broad interrogatory requiring Complaint Counsel to identify all facts upon which it 

relied with respect to the charge of conspiracy. Respondent identified its Interrogatory NO.9 

issued to Complaint Counsel, which asked whether it was Complaint Counsel's "contention that 

any decision by McWane to change its (fittings) pricing in 2008-2009 was not made 

independently. . . (and i)f so (to) identify and describe the basis for Complaint Counsel's 

contention and identify all facts relating to the contention. . . upon which Complaint Counsel 

mayor wil rely at trial" to support the contention. Final Prehearing Conference, Tr. 62; see 

Respondent's First Set of Interrogatories to Complaint Counsel, Interrogatory NO.9. Arguably, 

this interrogatory seeks only information as to certain 2008 and 2009 conduct, which the 

Complaint alleges resulted from the conspiracy. In this regard Interrogatory NO.9 is not the sort 

2 Respondent erroneously relies on statements made in an FTC press release and statements in the complaint against 

Sigma that accompanied the entry of a settlement agreement with Sigma. Neither of these documents determnes 

the scope of the Complaint against Respondent. 

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of broad-based interrogatory that would inevitably lead to the disclosure of all evidence upon 

which Complaint Counsel would rely to prove the underlying conspiracy, such as any pricerelated communications and conduct by and/or among Respondent, Sigma and Star that occurred 

in April 2009 and June 2010. In any 
 event, however, Complaint Counsel stated at oral argument, 

and Respondent did not dispute, that Complaint Counsel answered the interrogatory by 

incorporating by reference its June 1,2012 Statement of 
 Material Facts submitted in support of 

Complaint Counsel's Motion for Parial Summar Decision, and such Statement described the 

Challenged Evidence. The foregoing further demonstrates that Respondent had notice of the 

existence and relevance of the Challenged Evidence. 

Based on all of the foregoing, there is an insufficient basis to conclude that Respondent 

lacked adequate notice of the Challenged Evidence or its relevance to the case. Whatever the 

reason for Respondent's judgment that it did not need to engage in "full" discovery on the 

Challenged Evidence, it canot be attributed to a reasonable belief that the Challenged Evidence 

and the underlying conduct to which it relates were outside the scope of the Complaint. 

Accordingly, Respondent has failed to demonstrate that admission ofthe Challenged Evidence 

would be unfair or unduly prejudicial, and should be excluded under Rule 3.43 (b). The Motion 

to Exclude is therefore DENIED. Respondent of course retains all rights to test the Challenged 

Evidence through cross-examination at tral. 

iv. 

In the alternative, Respondent moves for an order continuing the trial for 60 days to allow 

Respondent to conduct fact and expert discovery relating to the Challenged Evidence, potentially 

including "a number" of unspecified additional depositions, or reopening of prior depositions, 

document requests, and expert analyses. 

Commission Rule 3 .41 (b) provides that an administrative hearing "wil take place on the 

date specified in the notice accompanying the complaint, . .." 16 C.F.R. § 3.41(b). Although 

Respondent's Motion requests a continuance, because the request involves additional time to 

conduct discovery it wil be treated herein as either: (1) a motion to reopen and extend the 

discovery deadline in the Scheduling Order, pursuant to Rule 3.21 
 (c)(2), which states: "The Administrative Law Judge may, upon a showing of good cause, grant a motion to extend any 

deadline or time specified in this scheduling order other than the date of 
 the evidentiary hearng." 16 C.F.R. § 3.21 
 (c) (2) and/or (2) a motion to suspend proceedings to allow deferred discovery
 under Rule 3.41(b)(1), which states:
 

The Administrative Law Judge may order hearings at more than one place and may grant 

a reasonable recess at the end of a case-in-chief for the purpose of discovery deferred 

during the prehearing procedure if the Administrative Law Judge determines that such 

recess wil materially expedite the ultimate disposition of the proceeding. 

16 C.F.R. § 3.41(b). Analyzing Respondent's request to delay the hearing under these applicable 

Rules, Respondent's requested relief 
 is unwarranted. Respondent contends it declined to take 

full discovery regarding the Challenged Evidence because it lacked notice that the Challenged 

Evidence would be "at issue in the triaL." Motion at 7. As set forth above, Respondent has failed 

to demonstrate that it lacked such notice, and consequently, that such asserted lack of 
 notice 

justified its decision not to engage in full discovery on the Challenged Evidence during the 

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discovery period. Moreover, it is unclear why Respondent waited nearly three months after 

receiving Complaint Counsel's Answer to Interrogatory Number 9 to seek additional discovery. 

Therefore, Respondent has not demonstrated good cause to reopen discovery under Rule 

3.21(c)(2). Moreover, Respondent's allegations of 
 unspecified, "potential" discovery needs do 

not support a recess of 60 days under Rule 3.41 (b). Respondent presents no basis for concluding 

that such a suspension of proceedings "wil materially expedite the ultimate disposition" of the case, as required under Rule 3.41 
 (b), and would also conflct with the requirements in the Rules that administrative hearings "proceed with all reasonable expedition." 16 C.F.R. § 3.41(b); see 

also id. at § 3.21 (c )(2) (providing that in determining whether to grant a motion to revise 

scheduling order, the Administrative Law Judge shall consider, inter alia, "the need to conclude 

the evidentiary hearing and render an initial decision in a timely manner"). 

For all the foregoing reasons, Respondent's alternative request for a continuance is 

DENIED. 

v. 

Having fully considered Respondent's Motion, Complaint Counsel's Opposition thereto, 

and oral argument on the Motion, and for all the foregoing reasons, Respondent's Motion to 

Exclude Evidence, or in the Alternative, Motion for Continuance is DENIED. 

ORDERED: )) M ~~,'I" 

D. Michael C appell 

Chief Administrative Law Judge 

Date: September 7,2012 

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