Source: https://law.justia.com/cases/federal/appellate-courts/F2/596/10/447270/
Timestamp: 2019-10-19 13:41:09
Document Index: 788704184

Matched Legal Cases: ['§ 1312', '§ 1313', '§ 1313', '§ 1313', '§ 1313', '§ 1313', '§ 1312']

United States of America, Petitioner-appellant, v. Gaf Corporation, Respondent-appellee,eastman Kodak Company, Intervenor-appellee, 596 F.2d 10 (2d Cir. 1979) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Second Circuit › 1979 › United States of America, Petitioner-appellant, v. Gaf Corporation, Respondent-appellee,eastman Koda...
United States of America, Petitioner-appellant, v. Gaf Corporation, Respondent-appellee,eastman Kodak Company, Intervenor-appellee, 596 F.2d 10 (2d Cir. 1979)
US Court of Appeals for the Second Circuit - 596 F.2d 10 (2d Cir. 1979) Argued Nov. 22, 1978. Decided Feb. 9, 1979. Rehearing Granted in Part and Denied in Part March 15, 1979
On January 29, 1976, before the enactment of the Amendments mentioned,2 GAF Corporation, plaintiff in an antitrust action brought against Kodak in the Southern District of New York (Hon. Marvin E. Frankel), sought permission from the trial judge to transmit to the Justice Department some fifty-two documents that had been secured through discovery, together with a memorandum of analysis of the documents. Although only two of the documents remained classified under a prior order, then Judge Frankel, on May 18, forbade GAF to turn over any of the fifty-two documents (and by implication the memorandum based upon them). GAF Corp. v. Eastman Kodak Co., 415 F. Supp. 129.3 The District Judge reasoned that the initial discovery process had been aided by a cooperative relinquishment on Kodak's part pursuant to an explicit understanding that discovery was being given solely for use in the case. It is interesting to note, however, that there was no clearcut understanding, as my dissenting brother Mulligan seems to assume, that the parties deliberately excluded the Government in their "explicit agreement." For Judge Frankel put it this way:
The Judge declared that the Government's interest was "in use of these materials for potential 'law enforcement' purposes not clearly specified or specifiable in advance." 415 F. Supp. at 130. Moreover, recognizing that the real value of GAF's "gift" to the Government lay in the legal labors expended in the selection and analysis of relevant documents, Judge Frankel expressed concern about the potential for oppression in an alliance between private and Government resources directed against Kodak, particularly in "the use of private discovery as a possible supplement to federal grand jury proceedings." 415 F. Supp. at 133.
Judge Owen denied the petition based upon his interpretation of the amended Antitrust Civil Process Act as Precluding a demand for documents of a target company that are temporarily in the custody of a litigation adversary, obtained through discovery. The court recognized that a literal reading of amended § 1312(a) favored the Government's position. It reasoned that if the statute were to be read literally, however, the provision in § 1313(c) (3) must also be read literally. That subsection provides that no material obtained by CID may be made available for examination by anyone other than the Department of Justice "without the consent of the person Who produced such material, etc." (emphasis added).
We turn, then, to Judge Owen's understandable concern lest the confidentiality of the Kodak records turned over by GAF be subject to disclosure by the Government to outsiders, without Kodak's authorization, on the ground that Kodak would not actually be considered the "person who Produced such material." That concern was premised on a literal reading of § 1313(c) (3) as conferring the power of consent over further disposition of documents in Government hands only upon the party which physically yielded them under a CID. But we construe § 1313(c) (3) differently, as vesting that authority to consent in the real party in interest the owner of the documents rather than in a party who, having temporary possession of papers for a limited purpose, physically transmits them to the Government. Our construction of § 1313(c) (3) is compelled in order to make sense of Congress' explicit approval of the issuance of CIDs against agents with temporary custody of corporate papers. See S.Rep.94-803 at 14-15. It is highly implausible that Congress intended that when a CID is directed against a former target company employee who has retained possession of some of the target's documents, the employee should have the legal authority to give the only effective consent required for further distribution because he happens to be the "person who (literally) Produced such material." By the same token, we do not read § 1313(c) (3) as vesting sole authority to consent to disclosure in an entity in temporary custody of documents because of litigation. A company like Kodak, as the real party in interest, should be deemed to have been the "person who produced" the documents5 for purposes of the consent required.6
Kodak cites only one case which, it believes, supports by analogy its claim that an administrative agency's powers (like those of the Department of Justice) are not broad enough to obtain documents held pursuant to previous discovery in a civil suit. Zenith Radio Corp. v. Matsushita Electric Indus. Co., 1978-1 Trade Cases P 61,961 (E.D. Pa. 1976). The District Court in Zenith did deny to the International Trade Commission the right to enforce an investigative demand for discovered documents, but the denial was based upon a determination that the documents were or should be under a protective order, not that the Agency lacked power to demand discovered documents. The case is, therefore, irrelevant to our resolution of the question of construction of the statutory Power of Justice to issue a CID for discovered material.
Except where inconsistent with the context of the Antitrust Civil Process Act, enforcement of a CID may be resisted on the same grounds as enforcement of a subpoena in ordinary civil litigation. See 15 U.S.C. § 1312(c) (2); Aluminum Company of America, supra, 444 F. Supp. at 1345-46. Here GAF has asserted no objection to turning over the product of its legal labor. The only basis for prohibiting enforcement of the CID is that some or all of the Kodak documents held by GAF are under a protective order that precludes Government access.7 See Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 1978-1 Trade Cases P 62,019 (E.D. Pa. 1978) (court will not enforce a subpoena of documents under protective order in a separate administrative proceeding); Union Carbide Corp. v. Filtrol Corp., 278 F. Supp. 553, 555-56 (C.D. Cal. 1967) (court conditions discovery of depositions taken in another case upon vacation or modification of protective order of court in which depositions originally taken); Cf. Olympic Refining Co. v. Carter, 332 F.2d 260, 262 (9th Cir.), Cert. denied, 379 U.S. 900, 85 S. Ct. 186, 13 L. Ed. 2d 175 (1964) (effort to vacate protective orders in one proceeding as predicate to discovery in another); American Securit Co. v. Shatterproof Glass Corp., 20 F.R.D. 196 (D. Del. 1957) (same).
The existence of an outstanding protective order is not in itself fatal to the Government's effort to obtain the documents. Such orders are subject to modification to meet the reasonable requirements of parties in other litigation, for example. See Ex parte Uppercu, 239 U.S. 435, 36 S. Ct. 140, 60 L. Ed. 368 (1915) (directing lower court to permit sealed documents to be obtained by non-party to original litigation); Olympic Refining Co. v. Carter, supra.
I respectfully dissent. My brother Gurfein has fully and fairly set forth the facts which in any event are not really disputed. When GAF brought its antitrust action against Kodak in 1973, counsel for both parties entered into an explicit agreement that Kodak would produce documents at the discovery stage but solely for the purposes of that suit and no other. Pursuant to that understanding Kodak surrendered some 400,000 documents, and GAF counsel and economists dutifully indexed and analyzed them to determine their antitrust significance. We were advised on the oral argument of this appeal that this exercise cost GAF some two million dollars. When the Antitrust Division of the United States Department of Justice in 1976 indicated its interest in the documents and naturally in the professional opinion of the stable of cognoscenti assembled by the plaintiff, GAF was understandably anxious to provide them. Judge Frankel, however, held that the documents, the indices and the interpretative comments were by express agreement to be utilized solely for the purposes of the private lawsuit. GAF Corp. v. Eastman Kodak Co., 415 F. Supp. 129 (S.D.N.Y. 1976). No one seems to question the propriety of the protective order which he issued. Subsequently, Congress enacted the Antitrust Improvements Act of 1976, P.L. 94-435, which Inter alia permitted the Government to issue a Civil Investigative Demand (CID) against non-target persons who were in possession of "documentary material" or "information" which related to a civil antitrust investigation.
In Aluminum Company of America v. Department of Justice, 444 F. Supp. 1342 (D.D.C. 1978) (Gasch, J.), a CID was the subject of litigation, but no question was involved concerning the use of a CID in seeking documents already discovered in private litigation