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UNITED STATES OF AMERICA 5'1,1"-~$­ FEDERAL TRADE COMMISSION 

OFFICE OF ADMIISTRATIVE LAW JUGES 

)
 

In the Matter of
 ) 

) 

Polypore International, Inc., ) Docket No. 9327
 

a corporation, ) Public Document
 

)
 

Respondent.
 ) 

) 

) 

NON-PARTY HOLLINGSWORTH & VOSE COMPANY'S MOTION 

FOR LIMITED INTERVENTION AND MEMORADUM IN SUPPORT 

Non-party Hollngsworth & Vose Company ("H&V") moves, pursuant to 16 C.F.R. 

§ 3.14(a), for leave to intervene in this action for the limited purpose of opposing any order or 

remedy affecting its rights and in particular its contractual rights arising under the March 23, 

2001 Cross Agency Agreement between H&V and Daramic, Inc. (the "Cross Agency 

Agreement" or the "Agreement"), i providing for 

H&V's intervention satisfies the requirements of 16 C.F.R. § 3.14(a). 

Complaint Counsel has asserted in this case that Daramic, as a part of an unlawful pattern 

of anti 
 competitive conduct intended to monopolize certain markets for PE battery separators, 

entered into the Cross Agency Agreement and the non-competition provisions in Section 4 

"in order to prevent H&V from entering the PE separator market." (CompL. ir 47.) As a 

remedy for DaramIc's alleged unfair competition with respect to the Cross Agency Agreement, 

thereof 

Complaint Counsel seeks an order - not only requiring Daramic to cease and desist from 

enforcing the non-competition provisions with respect to PE battery separators - but also 

1 A copy of the Cross Agency Agreement is attached hereto as Exhibit 1. H& V believes that the Agreement was 

admitted into evidence as PX 0094. 

uun_ ~ un "î -- ~ .- --~.­

l 
compelling Respondent to modify the Agreement in order to rescind H&V's rights arising under 

Section 4(a) of 
 the Agreement. 

Fundamental principles of due process prohibit such an order. H& V was not a party to 

this action, and no claims were asserted against it. Absent a full and fair opportnity to be heard, 

including through the presentation of evidence and the right of cross-examination, H&V's 

contractual rights may not be adjudicated. In addition to the constitutional infirmity of 

Complaint Counsel's proposed rescission, the requested remedy is overbroad and not reasonably 

related to the unlawful practices alleged to have been committed by Daramic and therefore an 

impermissible exercise of 
 the Commission's remedial authority. At issue in this case with 

respect to the Cross Agency Agreement was Daramic's conduct, not H&V's. 

These "substantial issues of law" relating to the Cross Agency Agreement are unique to 

H&V and have not and wil not be raised by the Respondent. Their consideration is of 
 utmost 

importance, wil not materially delay the proceedings and wil avoid ancilary litigation. Under 

the standards for intervention, H& V should be permitted to intervene to be heard on the merits of 

the proposed remedy insofar as it affects H&V's rights. 

BACKGROUND 

Through its Battery Products Business Unit, H& V has manufactured, sold and 

distributed, among other products, an AGM battery separator, for use in valve-regulated lead 

acid ("VRLA") batteries. Unlike PE battery separators made by Daramic, H&V's AGM battery 

separators cannot be used in flooded lead acid batteries. 

In March 2001, Daramic and H&V entered the Cross Agency Agreement providing for 

L The Agreement contemplated that 

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._- ~ _. ---_._---,----- ----­
H& V witnesses testified in deposition, 

L (PX0917 at 077 (Cullen Dep. at 321-22, in camera)).2 

Indeed, 

L (PX0917 at 077-078 (Cullen Dep. at 

322-24, in camera)). 

L (Agreement § 4(ab); PX0917 at 012 (Cullen Dep. at 47-48, in camera); PX0925 at 018 (Porter Dep. at 65-66, in 

camera)).3 Section 4 of 
 the Cross Agency Agreement states in relevant part: 

(Agreement § 4(a-b)). 

The Cross Agency Agreement was 

l 

Complaint Counsel has alleged that Daramic did not have a proper pro 
 competitive 

2 Excerpts of PX0917, with relevant passages highlighted, are attached hereto as Exhibit 2.
 

3 An excerpt ofPX0925, with relevant passages highlighted, is attached hereto as Exhibit 3.
 

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.. 
purpose to enter the Cross Agency Agreement and that it utilized the Cross Agency Agreement 

to solidify its unlawful monopolization of several PE battery separator markets. Complaint 

Counsel's allegations include: 

· "(TJhe evidence establishes that Daramic induced H& V to agree not to compete
 

in several markets - markets that have long been dominated by Daramic." (CC 

Post- Trial Br. at 67 (emphasis added)). 

· Upon learning that H& V was exploring the possibility of entering the PE 

business, "fin) order to block this competitive threat, Daramic approached H& V 

and proposed an 'allance'." (Id. at 63 (emphasis added)). 

· "Daramic 's principal purpose in contracting with H& V was to keep H& V out of 

the PE separator market." (CC Pre-Trial Br. at 32 (emphasis added)). 

· The relationship with H&V was par of 
 "Daramic's pattern of coercive and 

exclusionary behavior to obtain or maintain monopoly status in several relevant 

markets." (Id. at 29l 

The "relevant markets" where Complaint Counsel alleges the Agreement operated 

unlawfully are markets for PE battery separators. Complaint Counsel maintains that AGM 

battery separators, such as those made by H&V, do not compete with Daramic's PE separators in 

the same markets. (See CC Post-Trial Br. at 25 & n.16 ("In North America, separators for SLI 

batteries are made from PE . . .. Purchasers of SLI separators for flooded batteries cannot switch 

to using an AGM separator.")). 

This case was limited to markets for PE separator and Daramic's conduct with regard to 

the Cross Agency Agreement; the AGM battery separator industry was not at issue. The 

Commission has not adjudicated whether the non-competition provisions of the Agreement are 

unreasonable restraints of competition with respect to the AGM battery separator industry. The 

essence of Complaint Counsel's claim here is that the non-competition provisions in Section 4(b) 

4 H&V does not concede that Daramic's motives were improper or that the non-compete in Section 4(b) was not a 

reasonable ancilary restraint, but agrees with Respondent that Daramic had a proper procompetitive purpose to 

expand its sales and distribution globally and that the non-compete with respect to PE separators was reasonably 

necessary to allow for the operation of the joint venture. 

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_l- were overbroad or not otherwise reasonably necessary restraints ancilary to a
 

legitimate sales agency agreement for PE battery separators. Nevertheless, in Part VIII of its 

proposed order for relief, Complaint Counsel seeks not only to prohibit Daramic from enforcing 

Section 4(b), but also to rescind the provisions of 
 Section 4(a), and H&V's rights
 

thereunder,
 L ordering Respondent as 

follows: 

1. Within fifteen (15) days after the date this Order becomes final: (a)
 

modif and amend the H & V Agreement in writing to terminate and declare null 

and void, and (b) cease and desist from, directly or indirectly, or through any 

corporate or other device, implementing or enforcing, the covenant not to compete 

set forth in Section 4 of the H& V Agreement, and all related terms and definitions, 

as that covenant applies to North America and to actual and potential customers 

within North America. 

2. Within thirty (30) days after the date this Order becomes final, file
 

with the Commission the written amendment to the H& V Agreement 

Paragraph VLA.l fsic) . . ("Amendment") that complies with the requirements of 


(CC Proposed Order VIlLA, at 26-27 (emphases added)). While rescission of 
 Section 4(b) could

reasonably remedy purportedly ilegal activity arsing from Daramic's actions in entering the 

agreement, rescission of 
 Section 4(a) could not and does not address the governent's claim in 

this case. To the contrary, rescission of 
 Section 4(a) would permit Daramic to _ 

_l - the very reason for the non-competition provision.
 

ARGUMENT 

A. H&V Must be Permitted to Intervene to Address Substantial Issues of 
 Law Not
 

Already Raised with Respect to Remedies Relating to the Cross-Agency Agreement. 

Under the FTC Act, any non-pary "may be allowed by the Commission to intervene and 

appear in said proceeding by counselor in person" upon "good cause shown." 15 U.S.C. § 

45(b); see 16 C.F.R. § 3.14(a) ("The Administrative Law Judge or the Commission may by order 

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____n.. 
permit the intervention to such extent and upon such terms as are provided by law or as 

otherwise may be deemed proper."). In order to demonstrate good cause, it must be shown that 

"the persons seeking such intervention desire to raise substantial issues of law or fact which 

would not otherwise be properly raised or argued; and that the issues raised are of suffcient 

importance to warrant additional expenditure of Commission resources on a necessarily longer 

and more complicated proceeding." In re Ky. Household Goods Carriers Ass 'n, Dkt. No. 9309, 

2004 FTC LEXIS 84, at *3 (Mar. 10,2004) (Chappell, A.L.J.); In re Kellogg Co., Dkt No. 8883, 

1978 FTC LEXIS 280, at *8, *9 n.9 (June 9, 1978) (Kellogg lJ (similar). The ALJ has discretion 

in determining whether to limit intervention to certain portions of the proceeding, and if so, to 

what extent. See Kellogg II, 1979 FTC LEXIS 89, at *2-*3. 

There is good cause for H&V's intervention for the narow purposes sought by this 

Motion. If Complaint Counsel prevails with respect to the relief sought by Part VIII of its 

proposed order, H&V's contract rights wil have been adjudicated without its having been a 

pary to this action. No other party can adequately represent H&V's interest with respect to this 

issue: Complaint Counsel seeks abrogation of 
 the entirety of 
 Sections 4(a) and 4(b) without 

regard to the proper scope of its claim for relief. While Respondent has an interest in avoiding 

any modification of the Cross Agency Agreement, it does not have the same interest as H& V to 

preserve H&V's rights with respect to AGM battery separators. Respondent stands to gain 

unfairly by virte of 
 Complaint Counsel's requested remedy by using H&V's confidential 

information and goodwil to compete in the sale of AGM battery separators. 

Intervention should be granted as a matter of right where, as here, "the intervenors are 

persons whose contract rights are at stake." PepsiCo, Inc. v. FTC, 472 F.2d 179, 184 (2d Cir. 

1974); see Kellogg I, 1978 FTC LEXIS 280, at *6 ("I believe, largely on the strengt of the 

Second Circuit's decision in PepsiCo, that a stranger may intervene as a matter of right in a 

Commission proceeding."). PepsiCo is consistent with constitutional principles of due process, 

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which require that a party whose contractual rights are at stake be entitled to be heard at a 

meaningful time and in a meaningful manner in the disposition of those rights, as this 

Commission has recognized. See Kellogg I, 1978 FTC LEXIS 280, at *11-*12 (holding that 

procedural due process requires that the owner of a property interest be given notice and an 

opportnity to be heard before the property interest is divested); see also Rein v. Socialist 

People's Libyan Arab Jamahiriya, 568 F.3d 345,354 (2d Cir. 2009) (a court disposes of a 

property interest in reallocating contract rights and due process requires that each affected 

individual have a fundamentally fair chance to present evidence, and to rebut opposing 

submissions); cf Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (a person in jeopardy of serious 

loss must be given notice and an opportunity to be heard at a meaningful time and in a 

meaningful manner).
 

Thus, this Court must use its broad discretion to allow H& V to participate meaningfully 

in addressing a proposed remedy which directly threatens H& V's contractual rights. 

B. H&V's Intervention to Address these Significant but Narrowly Defined Issues Wil Not 

Unduly Delay these Proceedings and Wil Avoid Ancilary Litigation on the Propriety of 

the Commission's Order for Relief. 

The issues raised by H& V on the remedy question are of critical importance to protecting 

H& V's constitutional rights and to assuring the most appropriate formulation of relief, in the 

event of a finding of liability against Daramic. Additional briefing by H& V on these narrow 

issues in the event the requested remedy is granted wil not materially delay the resolution of this 

matter. Ancilary litigation wil. 

H& V's participation as a limited intervenor wil aid the Commission in selecting a 

narrowly tailored remedy without undue expenditure of additional resources. Remedies imposed 

by the Commission must bear a "reasonable relation to the unlawful practices found to exist." 

FTC v. Natl Lead Co., 352 U.S. 419, 428 (1957); see, e.g., In re Ky. Household Goods Carriers 

Ass 'n, 139 FTC 404,506 (2004) (Chappell, A.L.J.). By contrast, the remedy sought by 

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Complaint Counsel here is impermissibly overbroad. To the extent the proposed order merely 

requires Respondent to cease and desist from enforcing restrictions on H&V's competition in the 

sale of PE battery separators and to modify the Agreement such that Section 4(b) is voided, the 

remedy is appropriately tailored to address the claims asserted in this case. To the extent the 

proposed order also purports to void or prohibit the implementation of Section 4( a), it is not 

proper. Requiring Respondent to "modify and amend the H&V Agreement in writing to declare 

null and void. . . the covenant not to compete set forth in Section 4 of the Agreement" is a 

disproportionate remedy not tailored to redress the alleged wrongdoing by Daramic with respect 

to the alleged PE battery separator markets. 

Issues concerning the proper scope of 
 the Commission's remedial authority are vital. 

They can be addressed efficiently in this action in any briefing following the initial decision. 

H&V should be permitted to intervene for that purpose. 

CONCLUSION 

For the foregoing reasons, H&V requests that it be permitted to intervene in this action 

for the limited purpose of addressing any remedy affecting its rights, including its rights under 

the Cross Agency Agreement. 

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Dated: September 1, 2009 Respectfully submitted,
 

HOLLINGSWORTH & VOSE COMPANY 

By its attorneys, 

~athrn K. Conde
 

LJ 7) f~

Jonathan D. Persky
 

Nutter McClennen & Fish LLP
 

155 Seaport Boulevard
 

World Trade Center West
 

Boston, MA 02210
 

Tel: (617) 439-2420
 

Fax: (617) 310-9420
 

E-mail: kconde(lnutter.com 

jpersky(lnutter. com 

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CERTIFICATE OF SERVICE 

I hereby certify that on September 1, 2009, I fied via overnight delivery and electronic 

mail delivery an original and two copies of 
 the foregoing Non-Party Hollngsworth & Vose 

Company's Motion for Limited Intervention and Memorandum in Support (Public) and that the 

electronic copy is a true and correct copy of the paper original and that a paper copy with an 

original signature is being fied with: 

Donald S. Clark, Secretary 

Offce of the Secretary 

Federal Trade Commission 

600 Pennsylvania Avenue, NW, Rm. H -135 

Washington, DC 20580 

secretary(lftc. gov 

I hereby certify that on September 1, 2009, I caused to be served via electronic delivery 

and first-class mail delivery a copy of the foregoing Non-Party Hollingsworth & Vose 

Company's Motion for Limited Intervention and Memorandum in Support (Public) on: 

Wiliam L. Rickard, Jr., Esq. J. Robert Robertson, Esq. 

Eric D . Welsh, Esq. Steven Dah, Esq. 

Parker, Poe, Adams & Bernstein, LLP Bureau of Competition 

401 South Tryon Street, Suite 3000 Federal Trade Commission 

Charlotte, North Carolina 28202 600 Pennsylvania Avenue, NW 

willamrickard(lparkerpoe. com Washington, DC 20580 

ericwelsh(lparkerpoe. com rrobertson(lftc. gov 

sdahm(lftc. gov 

yA- P fi 

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f Exhibits 1, 2, and 3 are filed in camera L
 
UNITED STATES OF AMERICA
 

. FEDERAL TRADE COMMISSION
 

OFFICE OF ADMIISTRATIVE LAW JUDGES
 

)


In the Matter of
 ) 

) 

Polypore International, Inc., ) Docket No. 9327
 

a corporation, )
 

)
 

Respondent.
 ) 

) 

) 

rPROPOSEDl ORDER 

Upon consideration of 
 Non-Part Hollingsworth & Vose Company's ("H&V") Motion 

for Limited Intervention and Memorandum in Support, 

It is ORDERED that the Motion for Limited Intervention is GRANTED. H&V wil be 

permitted to intervene in this action for the limited purpose of addressing any remedy affecting 

its rights, including its rights under the Cross Agency Agreement. 

D. Michael Chappell 

Administrative Law Judge 

Dated: September _, 2009
 

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