Opinion ID: 385705
Heading Depth: 1
Heading Rank: 3

Heading: the legality of the equal access provision

Text: 63 Exxon also objects to that aspect of the June 25 Order that grants complaint counsel for the Federal Trade Commission equal opportunity for access to Drives Group information and personnel, 35 outside of the normal discovery process established by the FTC for use in adjudicative proceedings. 36 Since we agree with the contention made by Exxon that the FTC should be required to follow its own established rules in this case, we remand this action to the District Court with instructions to modify the Order accordingly. 64 The Federal Trade Commission has established rules of practice to govern the manner in which the Commission may secure information from outside parties. Essentially, two sets of procedures have been adopted by the Commission. The first set, codified at 16 C.F.R. §§ 2.1-2.15 (1980), establishes the procedures in which the FTC may secure information in nonadjudicative proceedings. These regulations govern the methods by which the Commission may conduct informal inquiries and investigations. The second set, codified at 16 C.F.R. §§ 3.31-3.40 (1980), establishes the procedures in which the FTC may secure information in adjudicative proceedings. 37 An adjudicative proceeding is a formal proceeding required by statute to be determined on the record after an opportunity for an agency hearing, 38 initiated by the filing of a complaint by the Commission, 39 and conducted before an administrative law judge. 40 The administrative action here initiated by the FTC against Exxon is of course an adjudicative proceeding. 65 The rules governing discovery in adjudicative proceedings are comprehensive and elaborate. 41 In general, the regulations provide that: 66 Parties may obtain discovery by one or more of the following methods: Depositions upon oral examination or written questions; written interrogatories; production of documents or things for inspection and other purposes; and requests for admission. 67 16 C.F.R. § 3.31(a). Unlike the Federal Rules of Civil Procedure, which provide for judicial intervention only when a party resists discovery, the regulations provide that a party seeking discovery must obtain the approval of the administrative law judge for every deposition requested and subpoena issued. See id. § 3.31(b)(1) (The Administrative Law Judge may authorize discovery upon a satisfactory showing that the requested discovery may reasonably be expected to yield information relevant to the allegations of the complaint, to the proposed relief, or to the defenses of any respondent); § 3.33(a) (Any party may request the Administrative Law Judge to order the taking of a deposition or depositions of a named person or of a person or persons described with reasonable particularity); § 3.34(b) (Application for issuance of a subpoena requiring a person to appear and depose or testify and to produce specified documents ... shall be made in writing to the Administrative Law Judge ....). See also FTC v. Gibson Products, Inc., 569 F.2d 900, 904 (5th Cir. 1978). 68 In this case, neither the District Court nor the Federal Trade Commission have advanced any reason why these established procedures should not be followed by the FTC in interviewing personnel and securing documentary evidence of the Drives Group. 42 No public interest has been cited to support the broad liberalization of the discovery rights of the FTC contained in the June 25 Order. Both the October 26 and the June 25 Orders were designed to protect the public interest in maintaining the Drives Group as a separate, competitively viable entity during the course of the FTC administrative litigation. That interest is not in any way furthered by affording the Federal Trade Commission access to information and personnel of the Drives Group outside of the administrative discovery process. 69 In addition, the equal access provision of the June 25 Order divests the administrative law judge of much of the authority delegated to him by the regulations cited above. Absent some compelling justification, we refuse to upset the careful scheme established by the Commission to govern its own proceedings. We hold, therefore, that the FTC is not entitled to equal access to Drives Group information and personnel. Rather, the FTC must follow its own established rules governing discovery in adjudicative proceedings. 70 This ruling is consistent with other decisions of the courts and the Commission. In In re Exxon Corp., 85 F.T.C. 404 (1975), the Commission denied a request of the FTC complaint counsel to substitute the more liberal discovery rules of the Federal Rules of Civil Procedure for the Commission's discovery rules in a complex administrative proceeding. In denying this request for special procedures and maintaining the established discovery regulations, the Commission stated that as a general principle the Commission does not favor tailoring special rules for individual cases. Id. at 404. In FTC v. Gibson Products, Inc., 569 F.2d 900 (5th Cir. 1978), the Fifth Circuit considered a challenge to a District Court order enforcing an FTC subpoena. Appellant argued that enforcement was improper because the FTC had violated its own discovery rules. Although it was held that the FTC had not deviated from its own procedures, the court noted: 71 This Court, of course, will not aid in enforcing a subpoena if the Commission did not adhere to its rules governing the use of such discovery tools. When the FTC publishes rules, the FTC is bound by them. 72 Id. at 904. 73 We also note United States v. United Technologies Corp., 466 F.Supp. 196 (N.D.N.Y.1979), a case in many ways similar to the present. In United Technologies the Government sought a comprehensive hold separate order during the course of litigation in District Court challenging the legality of a recently consummated acquisition. As part of its proposed hold separate order, the Government requested that the defendant corporation provide the Government with ongoing discovery in certain areas. The District Court granted the motion for a hold separate order, but denied the request for ongoing discovery as part of that order. As stated by the court: 74 (T)he Court believes that a request for such information should be made pursuant to the Federal Rules of Civil Procedure rather than as part of a motion for a Hold Separate Order. 75 Id. at 205. 76 We agree that the FTC's requests for information in this case should be governed by applicable rules of discovery and not intermingled as part of a hold separate order. No reason has been given why established discovery procedures should not be followed. Accordingly, we remand this action to the District Court for modification of this aspect of the June 25 Order.