ORIGINAL

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

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In the Matter of

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POL YPORE INTERNATIONAL, INC., Docket No. 9327

Respondent.

ORDER ON NON-PARTY THE MOORE COMPANY'S MOTION

TO LIMIT RESPONDENT'S SUBPOENA AND RECOVER COSTS,

AND ON RESPONDENT'S CROSS-MOTION TO COMPEL

I.

On December 30, 2008, non-pary The Moore Company ("Moore") filed a motion for an

order to limit the subpoena duces tecum that Respondent Polypore International, Inc.

("Polypore," "Daramic," or "Respondent") served on Moore on November 6,2008, and to

recover Moore's costs of complying with Respondent's subpoena ("motion"). On Januar 8,

2009, Respondent filed its Memorandum in Opposition to Moore's motion, together with a crossmotion to compel Moore to produce the documents Respondent's subpoena seeks. Moore

submitted a motion for leave to file a reply brief on January 21, 2009, which was granted on the

following day, and submitted its reply brief in further support of its motion to limit the subpoena

and to recover costs on January 26,2009.

For the reasons set forth below, Moore's motion is DENIED and Respondent's crossmotion is GRANTED.

II.

Moore is a U.S. corporation, located in Rhode Island, with a wholly-owned subsidiar

Amer-Sil, S.A. ("Arer-Sil"), located in Luxembourg. Moore contends that it does not compete

in the relevant product markets and the relevant geographic market alleged in the Federal Trade

Commission's ("FTC" or "Commission") Complaint. Moore asserts that the documents sought

by Respondent's subpoena are not relevant to this proceeding. Moore also claims that the
subpoenaed information may be obtained more efficiently and cost-effectively from the U.S.

battery manufacturers identified in the subpoena than from Amer-SiL.

Moore states that it would take approximately 1000 hours and cost approximately

$490,000 to collect and review responsive materials for privilege, were the subpoena not limited,

and that "(t)his would effectively cripple Amer-Sil and force it to cease its normal business

operations." Declaration of Guy Dauwe, Amer-Sils Managing Director, in Support of Moore's

Motion to Limit Subpoena ir 33. Moore asks for an order requiring Respondent to reimburse it

for these costs, which it claims are unreasonable.

In addition, Moore objects to producing materials, such as information on Amer-Sils

relationships with its customers, that it deems highly confidential and commercially sensitive.

Lastly, Moore contends that most, ifnot all, of the subpoenaed documents are in Arer-Sils

possession in Luxembourg. Moore charges that the subpoena, while served on it in the United

States, circumvents the Commission's Rules of Practice regarding service of a subpoena in a

foreign country and contravenes European Union privacy and data protection laws.

Respondent argues that the documents requested in its subpoena are clearly relevant to

the issues raised by the Complaint and Answer, including Respondent's contentions that the

Complaint has mischaracterized the relevant product and geographic markets. The limitation on

Respondent's subpoena that Moore offers would, Respondent submits, unjustly hinder its

defense to the Commission's Complaint.

In Respondent's view, Moore fails to show that compliance with the subpoena would be

unduly burdensome, and even if Moore could make any such showing, reimbursement should be

limited to copying costs. Respondent asserts that the Protective Order entered in this proceeding

on October 23,2008 adequately addresses Moore's concerns about the disclosure of confidential

and commercially sensitive documents. Respondent further avers that Moore was properly

served in the United States, that Moore has control over the subpoenaed documents that are

located abroad, and that the production of these documents would not violate European Union

law.

III.

"Paries 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." 16 C.F.R. § 3.31(c)(1). An Administrative Law Judge may limit discovery

if the discovery sought is unreasonably cumulative or duplicative, or obtainable from some other

source that is more convenient, less burdensome, or less expensive; or if the burden and expense

of the proposed discovery outweigh its likely benefit. ¡d. In addition, an Administrative Law

Judge may enter a protective order to protect a party from undue burden or expense. 16 C.F .R.

§ 3.31(d).

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The burden is on the subpoenaed party to show that a subpoena request is unduly or

unreasonably burdensome. Federal Trade Comm 'n v. Texaco, Inc., 555 F.2d 862, 882 (D.C.

Cir.) (en banc); cert. denied, 43 i U.S. 974; reh'g denied, 434 U.S. 883 (1977). "Further, that

burden is not easily met where. . . the agency inquiry is pursuant to a lawful purpose and the

requested documents are relevant to that purpose." Id. That burden is no less when the

subpoena is directed at a non-party. In re Rambus Inc., 2002 FTC LEXIS 90, at *9 (Nov. 18,

2002); In re Flowers Industries, Inc., 1982 FTC LEXIS 96, at *15 (Mar. 19, 1982).

As set forth below, the documents requested by Respondent's subpoena are relevant and

the costs and other burdens of compliance with its subpoena are not unreasonable or undue.

Furthermore, the documents, though located abroad, are in the custody or control of Moore.

Accordingly, Moore has failed to meet its burden of establishing that the subpoena is

unreasonable and oppressive, and the subpoenaed documents shall be produced.

A. Relevance of, and Alternative Sources for, the Documents

The Complaint in this case defines the relevant product markets as "separators for

flooded lead-acid batteries" in the "(a) deep-cycle; (b) motive; (c) automotive; (and) (d)

uninterrptible power supply stationary ('UPS ')" markets or, alternatively, "an all PE

(polyethylene) separator market." Complaint irir 5,6. It defines the relevant geographic market

as North America. Id. ir 14. The Commission charges that Polypore has, in these markets, "the

market/monopoly power to exclude competition and/or increase prices ard reduce innovation

and has ilegally and wrongfully maintained its market power," and that Polypore's acquisition

of Microporous and other conduct by Polypore substantially lessen competition in numerous

ways. Id. irir 45,38. Respondent denies in its Answer each ofthe above allegations. Answer irir

5,6, 14,45,38.

The Complaint identifies Amer-Sil, the subject ofthis subpoena dispute, as one of "only

two other manufacturers of motive and UPS separators in the world (besides Respondent) of any

significance." Id. ir 15. Moore disputes that Amer-Sil competes in either the relevant product

markets or in the relevant geographic market that the Complaint sets forth, and argues on that

basis that Respondent's subpoena seeks documents that are not relevant to this proceeding.

Among the documents that Respondent's subpoena seeks are documents that relate to the

following: the scope of competition, both across products (including any products under

development and any substitute products or technologies) and across national borders, for lead

acid battery separators; actual and potential competitors to Amer-Sil for lead acid battery

separators; Amer-Sils market share for lead acid battery separators; the level or state of

competition in, and Amer-Sil's pricing and pricing strategy for, lead acid battery separators both

before and after Polypore's acquisition of Micro porous; any actual or potential barers to entry,

including costs of entry or of achieving minimum viable scale, in (a) North America and (b) the

world, for suppliers or manufacturers of lead acid battery separators; any effect on Amer-Sil's

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business of an acquisition of Microporous by Polypore, and any plan or course of action

considered or adopted by Amer-Sil in response to such actual or potential acquisition; and AmerSils submissions to, and communications with, the FTC regarding Polypore or Microporous.

Subpoena Duces Tecum Issued to Moore on Behalf of Polyp ore, Requests 1,7-16,28,31,33-35,

and 37.

The challenged requests in Respondent's subpoena seek materials that go to central issues

in this case, such as the definition of relevant product and geographic markets, market share in

appropriately defined markets, pricing, barrers to entry, and the competitive effect of Polyp ore's

acquisition of Micro porous. Moore proposes to limit Respondent's subpoena, for the time period

from 2007 to the date of the subpoena, to the following information relating to Moore's battery

separator products: gross revenue, average sales price, anual production volume, annual

production capacity, and customer lists. This proposal would yield information that is so

aggregated and circumscribed that it would shed little light on central issues in this case. The

documents that Respondent seeks from Moore may reasonably be expected to yield information

relevant to the Complaint's allegations, to the proposed relief, or to the Respondent's defenses.

Whle Moore states that the information sought by the subpoena may be obtained more

efficiently and cost-effectively from the U.S. battery manufacturers identified in the subpoena

than from itself, it points in this regard to only two of the 38 requests (requests 5 and 6) in

Respondent's subpoena. Even with respect to these two requests, it is not apparent that the

information in Moore's files would coincide with the information in the U.S. battery

manufacturers' files. Moore has not shown that the discovery sought is unreasonably cumulative

or duplicative, or is obtainable from some other source that is more convenient, less burdensome,

or less expensive.

B. Costs of Compliance with the Subpoena

In agency actions, "( s)ome burden on subpoenaed parties is to be expected and is

necessary in furtherance of the agency's legitimate inquiry and the public interest." Federal

Trade Comm'n v. Dresser Indus., 1977 U.S. Dist. LEXIS 16178, at *13 (D.D.C. 1977). "The

burden of showing that the request is unreasonable is on the subpoenaed party." Id. "Further,

that burden is not easily met where, as here, the agency inquiry is pursuant to a lawful purpose

and the requested documents are relevant to that purpose." Id. (enforcing subpoena served on

non-party by the respondent). See In re Kaiser Alum. & Chem. Corp., 1976 FTC LEXIS 68, at

*19-20 (Nov. 12, 1976) ("Even where a subpoenaed third pary adequately demonstrates that

compliance with a subpoena wil impose a substantial degree of burden, inconvenience, and cost,

that wil not excuse producing information that appears generally relevant to the issues in the

proceeding. ").

Moore seeks reimbursement for all costs of compliance with Respondent's subpoena.

The Commission, in In re Intl Tel. & TeL. Corp., 97 F.T.C. 202, 203, 1981 FTC LEXIS 75, at *3

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(March 13, 1981), has held that a "subpoenaed party is expected to absorb the reasonable

expenses of compliance as a cost of doing business, but reimbursement by the proponent of the

subpoena is appropriate for costs shown by the subpoenaed part to be unreasonable." See In re

North Tex. Specialty Physicians, 2004 FTC LEXIS 18, at *7 (Feb. 4, 2004) (denying cost

reimbursement because the subpoena did not impose an undue burden on the non-party); In re

R.R. Donnelley & Sons Co., 1991 FTC LEXIS 268, at *1-2 (June 6, 1991) (holding that

subpoenaed party "can be required to bear reasonable costs of compliance with the subpoena").

To determine whether expenses are "reasonable," the Administrative Law Judge "should

compare the costs of compliance in relation to the size and resources ofthe subpoenaed party."

In re Intl Tel. & Tel. Corp., 97 F.T.C. 202, 203, 1981 FTC LEXIS 75, at *3 (citing SEC v. OKC

Corp., 474 F. Supp. 1031 (N.D. Tex. 1979)). Moore estimates that it would take around 1,000

hours and cost approximately $490,000 at a blended rate of350 Euros (or, using the exchange

rate Moore is applying, $490) per hour to gather and review materials responsive to the

subpoena. Dawe Declaration in Support of Moore's Motion to Limit Subpoena ir 33. This cost

would, Moore alleges, "effectively cripple Amer-Sil and force it to cease its normal business

operations." Id. While Moore does not provide information as to its own total size and

resources, it states that Amer-Sil's annual revenue is much smaller than Polypore's, and ascribes

to Polypore, citing its 2007 Anual Report, net sales in excess of $537 milion. Id. ir 17.

Moore has not demonstrated that its estimated compliance costs, even if these costs were

to amount to $490,000, are unreasonable or unduly burdensome. Moreover, even ifthe

subpoenaed pary has shown that its costs of compliance are unreasonable, "where the non-party

is in the industry in which the alleged acts occurred and the non-party has (an) interest in the

litigation and would be affected by the judgment, only the cost of copying, and no other costs of

the search, need be reimbursed." In re Flowers Indus., Inc., 1982 FTC LEXIS 96, at *16-17

(March 19, 1982). Accordingly, Moore's request for reimbursement of its costs, including its

copying costs, is DENIED.

C. Confidential Documents

Moore also challenges the subpoena on the ground that the subpoena seeks highly

confidential and commercially sensitive information. Moore attaches to its reply brief

agreements with its customers and suppliers that would, Moore claims, be breached if it were to

comply with Respondent's subpoena. Moore's argument does not, however, take into account

the provisions protecting confidential information contained in the Protective Order that was

entered in this proceeding on October 23,2008.

Section 6(f) ofthe Federal Trade Commission Act and Section 21 (d)(2) ofthe Federal

Trade Commission Improvements Act (codified at 15 U.S.C. § 46(f) and 15 U.S.C. § 57b-2(b),

respectively) limit the Commission's ability to disclose confidential information to the public.

Moreover, the Commission's Rules of Practice do not specifically protect confidential

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information from discovery. "The fact that information sought by a subpoena may be

confidential does not excuse compliance." In re Rambus Inc., 2002 LEXIS 90, at * 11 (Nov. 18,

2002), quoting In re Kaiser Aluminum & Chem. Corp., 1976 FTC LEXIS 68, at *10 (Nov. 12,

1976); Federal Trade Comm'n v. Dresser Industries, Inc., 1977 U.S. Dist. LEXIS 16178, at *15

(D.D.C. 1977). Accordingly, Moore cannot withhold relevant documents based solely on its

desire to shield confidential information.

The Protective Order entered in this case allows disclosure of confidential documents to

an very limited group. "(A)bsent a showing to the contrary, one has to assume that the protective

order wil work, especially in light of the extensive use of the device in Commission litigation. .

. ." In re Coca-Cola Bottling, 1976 FTC LEXIS 33, at *5 (Dec. 7, 1976). In addition to the

safeguards of the Protective Order, the Commission's Rules governing in camera treatment of

confidential information prohibit disclosure of highly confidential documents at triaL. Pursuant

to Commission Rule 3.45(b), if either party seeks to introduce Moore's confidential information

into evidence at trial, Moore may file a motion for in camera treatment for documents it believes

should be withheld from the public record.

Because the Protective Order and in camera provisions wil protect Moore's confidential

documents, Moore cannot use its claims that the documents are confidential to shield them from

discovery.

D. Documents in Moore's Custody or Control

Moore also argues that the subpoena does not comply with Section 3.36 of the

Commission's Rules of Practice, because Respondent has failed to make the four specific

showings that the Rule requires, including a "good faith belief that the discovery requested would

be permitted by treaty, law, custom or practice in the country from which the discovery is

sought." 16 C.F.R.§ 3.36. Section 3.36 applies, however, only to certain types of subpoenas,

including "a subpoena to be served in a foreign countr." See 16 C.F.R. § 3.36. The subpoena

duces tecum that Respondent directed to Moore indicates that it was served not in a foreign

country, but in Westerly, Rhode Island.

Moore goes on to argue that the subpoena should be limited not only as an "attempted

end run around required FTC procedure," but as contravening European Union privacy and data

protection laws and as "offending fundamental principles of international law and policy"

regarding the production of documents located abroad. Moore has not demonstrated, however,

that the European Commission directive to which Moore cites, regarding "personal data,"

applies, or applies without an exception for legal proceedings, to the documents at issue here.

Generally, the cases cited by Moore require the movant to demonstrate that compliance with the

subpoena would in fact violate applicable foreign law. See In re Chase Manhattan Bank, 297

F.2d 611,613 (2d Cir. 1962) (Lower court denied motion where movant failed to submit

affidavits of Panamanian lawyer supporting interpretation of Panamanian law; upon reargument,

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lower court heard testimony of Panamanian legal expert that suffciently demonstrated that

production of documents would violate Panamanian law.); First Nat'l City Bank ofN Y. v.I.R.S,

271 F.2d 616,620 (2d Cir. 1959) (affidavit of movant bank's "expert" held insufficient basis for

nonenforcement ofthe subpoena). Compare Ings v. Ferguson, 282 F.2d 149, 152 (2d Cir. 1960)

(Affidavits of Canadian counsel, rebutted by opinion letter from different Canadian counsel,

raised genuine concern that enforcement of subpoena would violate Canadian law.).

Moreover, "( c )ourts have frequently required persons within their jurisdiction to produce

books and papers which were beyond the terrtorial limits of the court, even in cases where the

documents were located in a foreign country." Securities and Exchange Comm'n v. Minas de

Artemisia, SA., 150 F.2d 215,217 (9th Cir. 1945). See also In re Automotive Refinishing Paint

Antitrust Litig., 229 F.R.D. 482, 494 (B.D. Pa. 2005) (rejecting the argument that a subpoena was

invalid because the requested documents were located abroad and observing that '''the district in

which the production. . . is to be made' under Federal Rule of Civil Procedure 45(a)(2) is not the

district in which the documents are housed but the district in which the subpoenaed pary is

required to turn them over").

Cases arising under statutory provisions similar to the FTC Act confirm that discovery

requests served within the United States but seeking documents located abroad "are authorized

by the FTC Act and are not likely to present the same extraterrtoriality concerns as actual service

of discovery requests abroad." Statement of the Federal Trade Comm'n re Amendments to Its

Rules of Practice, 66 Fed. Reg. 17622, 17623 (Apr. 3, 2001) (citing Federal Maritime Comm'n v.

DeSmedt, 366 F.2d 464,468-469 (2d. Cir.), cert. denied, 385 U.S. 974 (1966); Civil Aeronautics

Bd. v. Deutsche Lufthansa Aktiengesellschaft, 591 F.2d 951, 953 (D.C. Cir.1979)). While

Section 9 of the Federal Trade Commission Act, 15 U.S.C. § 49, provides that "the production

of. . . documentar evidence may be required from any place in the United States," this

statutory provision has been interpreted to allow documents located abroad to be produced in

response to a subpoena validly served in the United States. In Securities and Exchange Comm 'n

v. Minas de Artemisia, SA., the court held that the Securities Act of 1933, authorizing the SEC

to require the production of documents "from any place in the United States," entitled the

Commission to an order enforcing its subpoena for books and records located in Mexico,

"provided only that service ofthe subpoena is made within the terrtorial limits ofthe United

States." 150 F.2d at 216-218. In Federal Maritime Comm'n v. DeSmedt, the court ruled that the

Shipping Act of 1933, authorizing the Federal Maritime Commission to compel documents

"from any place in the United States," authorized the Commission to "require a resident by

subpoena to produce documents under his control wherever they are located." 366 F .2d at 471.

And, in Civil Aeronautics Bd. v. Deutsche Lufthansa Aktiengesellschaft, the court determined

that the pertinent statutory provision "was not intended as a limitation on agency subpoena

authority, but rather was intended to free the agency of the geographic limitations imposed on

subpoenas issued by the distrct courts." 591 F.2d at 953.

The Commission, similarly, has held: "Section 9 authorizes the Commission to subpoena

documents located abroad, as well as documents located anywhere within the United States." In

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re General Foods Corp., 95 F.T.C. 383, 383-384 (1980) (remanding to the administrative law

judge on the issue of personal jurisdiction). See also In re Petition to Quash Subpoena (on)

Nippon Sheet Glass Co., 113 F.T.C. 1202, 1204 (1990) (ruling it within the FTC's statutory grant

of power to serve process on the U.S. agent or alter ego of a foreign entity).

One of the principal cases on which Moore relies, Laker Airways Ltd. v. Pan American

World Airways, 607 F. Supp. 324 (S.D.N.Y. 1985), was an unusual case in which the vacated

subpoenas had been served on British branch offices in New York that had not even been open at

the time of the events complained of, and that contained no files or documents, or any person

with any knowledge of, matters relating to the case. Id. at 326. Service of the subpoenas in New

York was found to be "a transparent attempt to circumvent" the Hague Convention on the

Taking of Evidence Abroad in Civil or Commercial Matters and "also an end run" around the

British Protection of Trading Interests Act of 1980. Id. at 326-327. By contrast, in this case,

Moore, the U.S. parent of a wholly owned foreign subsidiary, has not demonstrated that it has

not been operating at the time of the events complained of or that it, as the sole owner of AmerSil, does not have access to or the ability to obtain documents in the possession of Amer-Sil.

In determining whether a corporation within the United States may be compelled to

produce documents held by a foreign affiliate, courts consider the nature of the relationship

between the U.S. corporation and its foreign affiliate. E.g., Hunter Douglas, Inc. v. Comfortex

Corp., 1999 U.S. Dist. LEXIS 101, at *8-9 (S.D.N.Y. 1999). Documents need not be in the

possession of a party to be discoverable; they need only be in its custody or control. Cooper

Industries, Inc. v. British Aerospace, Inc., 102 F.R.D. 918,919 (S.D.N.Y. 1984) (requiring the

production of documents within the custody of the party's British affiliate). "'The test to

determine whether a corporation has custody and control over documents located with an

overseas affiliate is not limited to whether the corporation has the legal right to those documents.

Rather, the test focuses on whether the corporation has 'access to the documents' and 'ability to

obtain the documents.'" In re Rambus Inc., 2002 FTC LEXIS 90, at *12 (Nov. 18,2002)

(denying a non-part's motion to quash or limit a subpoena requesting documents in the

possession of a foreign parent company) (quoting Hunter Douglas, Inc. v. Comfortex Corp., 1999

U.S. Dist. LEXIS 101, at *9 (S.D.N.Y. 1999)). Accord, Addamax Corp. v. Open Software

Foundation, Inc., 148 F.R.D. 462, 467-469 (D. Mass. 1993) (ordering the production of

documents in the possession of a foreign parent company). This standard of "control" applies to

non-paries as well as to parties. Id. at 468; In re Rambus Inc., 2002 FTC LEXIS 90, at * 13 n.!.

Moore claims that most of the subpoenaed documents are in the possession of Amer-Sil,

its wholly-owned subsidiary in Luxembourg. Moore makes no claim, however, that the

documents in Amer-Sils possession are outside of Moore's custody or control, and there is no

indication in the papers submitted in support of this motion that Moore lacks control over AmerSil. Because the documents requested are in the custody or control of Moore, they are subject to

the subpoena and shall be produced.

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iv.

Moore, as the party resisting compliance with the subpoena, has not met the required

burden to limit the subpoena. For the reasons stated above, Moore's motion to limit

Respondent's subpoena and to recover its costs of compliance with that subpoena is DENIED;

Respondent's cross-motion to compel Moore to produce the documents requested in its subpoena

is GRANTED. Moore shall produce all responsive documents within twenty calendar days.

ORDERED:

D. Michael Chappell

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Administrative Law Judge

Date: February 3, 2009

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