Petition — Standard Oil Co. v. Federal Trade Commission

IN THE MIEHAEL RODAK JR. OUERE

Supreme Court of the United States

OcTOBER TERM, 1976

No. 76-1432

STANDARD Or CoMPANY OF CALIFORNIA, Petitioner,

v.

FEDERAL TRADE CoMMISSION, Respondent.

PETITION OF STANDARD OIL COMPANY OF

CALIFORNIA FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

LEE LOEVINGER

MARTIN MICHAELSON

JOSEPH C. BELL

815 Connecticut Ave., N.W.

Washington, D.C. 20006

(202) 331-4500

Attorneys for Petitioner

Standard Oil Company of

Of Counsel: California

HoGan & HARTSON

815 Connecticut Ave., N.W.

Washington, D.C. 20006

April 15, 1977

Press or Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C.

INDEX

Page

once acescanedtdecdadescacedes 2

CE ent eto cds doe peed eEAN ES 6066680000808 2

Questions Presented ........cccsesceeees iS éeveadies 2

ie oe ee en dee ee detndwieensees 3

ale oe cee kan vedsndeeduwds 3

Reasons for Granting the Writ:

1. Contrary to This Court’s Decisions, the Circuit

Court Has Removed Any Authority in the

Courts To Modify Administrative Subpoenas

for Burden or Relevance or To Protect Confi-

ET cue ineaed 0000 bp 0s 64506 oo4d0Krectes 8

2. The Decision Below Alters the Established

Standard of Review of District Court Decisions

Respecting Administrative Subpoenas by Al-

lowing the Reviewing Court To Reverse the Dis-

trict Court on Fact Issues Without Any Find-

ing of Abuse of Discretion or Clear Error .... 10

3. The Cireuit Court Decision Eliminates Any

Authority in the District Court To Limit the

Burden of Administrative Subpoenas Resulting

from Duplicative Investigations by Sister Fed-

SD SE boo Khas dad od 6640505044840 15

4. The Decision of the Court Below to the Extent

It Determines the Issue of Collateral Estoppel

Resolves an Important Point of Law in Conflict

with Decisions of This Court and Other Cireuits. 17

ee ad cade bs £68 bad hks boobs b0kb bees bake 18

CITATIONS

CasEs:

Application of Consumer’s Union of United States,

Inc., 27 F.B.D. 251 (S.D.N.Y. 1961) ............. 15

Area Rate Proceeding (Southern Louisiana), 40 FPC

530 (1968), modified on rehearmg, 41 FPC 301

(1969), aff’d sub nom, Austral Oil Co. v. FPC, 428

F.2d 407 (5th Cir.), cert. denied, 400 U.S. 950

an)” aff’d per curiam, 444 F.2d 125 (Sth Cir.

ME. ddndtbands cane hidesaueuntibusds hades coe 4

ii Citations Continued

Page

Area Rate Proceeding Offshore Southern Louisiana. 46

FPC 84 (1971), aff’d sub nom. Placid Oil Co. v.

F PC, 483 F.2d 880 (5th Cir. 1973), aff’d sub. nom.

Mobil Oil Corp. v. F PC, 417 U.S. 283 (1974) ..... 5

Chapman v. Maren Elwood College, 225 F.2d 230 (9th

Pe En «dp d-ankkoeu }s sen eucenbas abedaenaeds 9

FPC vy. Transcontinental Gas Pipeline Corp., 423 U.S.

YR a ey ee reer 10

FTC v. Green, 252 F. Supp. 153 (S.D.N.Y. 1966) ....11, 13

FTC v. Lonning, 539 F.2d 202 (D.C. Cir.1976) ........ 10

George H. Lee Co. v. FTC, 113 F.2d 583 (8th Cir. 1940) 17

Hellenic Lines, Ltd. v. Federal Maritime Bd., 295 F.2d

ee Gs Gh IE hve Ne Kencbacessananseeevas 11

Montship Lines Ltd. v. Federal Maritime Bd., 295 F.

§@ § OR Ra eee 11, 13

NLRB vy. Pipefitters, 45 U.S.L.W. 4144 (Feb. 22, 1977) 10

Oklahoma Press Pub. Co. v. Walling, 327 US. 186

DS old i eae oe ee ee eee 8,9

S & E Contractors, Inc. v. U.S., 406 U.S. 1 (1972) .... 16

Safir v. Gibson, 423 F.2d 137 (2d Cir. 1970), cert. de-

ee fk Fa errr er 17

See v. Seattle, 387 U.S. 541 (1967) ..............06. 9

Sunshine Coal Co. v. Adkins, 310 U.S. 381 (1940) .... 16

United States v. Morton Salt Co., 338 U.S. 632 (1950). = 8

United States v. Nixon, 418 U.S. 683 (1974) .......... 10

United States v. Star Construction Co., 186 F.2d 666

I Cr Oecet eran. (eked. ocr. aoe 12

United States v. Utah Construction Co., 384 U.S. 394

RI gegen gre ekepeae 4 e-eipepr rey motes me mesg aw 17

United States v. Willard Tablet Co., 141 F.2d 141 (7th

Mn. cco badd oveeede bse Gees cee eaweenenn ae 17

MISCELLANEOUS:

FPC Staff Report on National Gas Reserves Study

ME i hb. de bende So 0ek ee auaianea see cae 5

IN THE

Supreme Court of the United States

OcTOBER TERM, 1976

No.

STANDARD Or. CoMPANY OF CALIFORNIA, Petitioner,

Vv.

FEDERAL TRADE CoMMISSION, Respondent.

PETITION OF STANDARD OIL COMPANY OF

CALIFORNIA FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner Standard Oil Company of California re-

quests that a writ of certiorari issue to review the opin-

ion and judgment of the United States Court of Ap-

peals for the District of Columbia Circuit entered in

this consolidated proceeding on February 23, 1977.

2

OPINION BELOW

The en banc opinion of the Court of Appeals, not yet

reported, appears in the appendix hereto at Al.’ The

District Court decision is included as an appendix to

the decision of the Circuit Court-and is also printed as

part of the appendix to this petition at A57. The

unanimous panel decision of the Circuit Court, which

four judges of the en bane Court reversed, is reported

at 517 1'.2d 137 (1975) and is ineluded in the appendix

at A169.

JURISDICTION

The en bane judgment of the Court of Appeals was

entered on February 23, 1977. This Court’s jurisdie-

tion is invoked under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

1. Whether a district court enforcing Federal Trade

Commission subpoenas has jurisdiction to dvtermine

issues of relevancy, burden and confidentiality, and to

modify subpoenas accordingly.

2. Whether, in a subpoena enforcement proceeding,

district court findings respecting the scope of a Fed-

eral Trade Commission investigation, based on repre-

sentations to the court by the Federal Trade Commis-

sion, are factual in nature and hence subject to review

only for clear error or abuse of discretion.

3. Whether a district court enforcing Federal Trade

Commission subpoenas has discretion to narrow their

1 The en bane Court consisted of six judges, of whom two dis-

sented. The dissenting opinion is set forth at A69 in the joint

appendix filed by all petitioners from the consolidated proceeding.

The majority issued an order modifying its original opinion by

adding a footnote thereto. See appendix at A165.

3

breadth with respect to factual issues recently consid-

ered and determined by the Federal Power Commis-

sion, in order to avoid unnecessary compliance burdens.

4. Whether the Federal Trade Commission in an in-

vestigation pursuant to § 5 of the Federal Trade Com-

mission Act can be collaterally estopped with respect to

factual issues recently subject to a final determination

in a ratemaking proceeding of the Federal Power Com-

mission.

STATUTE INVOLVED

This case involves enforcement by the District Court

of administrative subpoenas duces tecum issued by the

Federal Trade Comission. 15 U.S.C. §49 (1970) pro-

vides in relevant part:

Any of the district courts of the United States

within the jurisdiction of which such inquiry is

carried on may, in case of contumacy or refusal to

obey a subpoena issued to any corporation or other

person, issue an order requiring such corporation

or other person to appear before the Commission,

or to produce documentary ev idence if so ordered,

or to give evidence touching the matter in question ;

and any failure to obey such order of the court may

be punished by such court as a contempt thereof.

STATEMENT OF THE CASE

Background

The subpoenas here in question were directed to cer-

tain natural gas producers including Petitioner in an

investigation of possible violations of § 5 of the Federal

Trade Commission Act.2 The 'TC investigation arose

out of allegations that natura] gas producers were un-

* The subpoena text is reproduced in the appendix at A46.

4

der-reporting proved reserves of natural gas in South-

ern Louisiana through the American Gas Association

(AGA). Since 1946 producers have reported to the

AGA individual proved reserves, and the AGA has pro-

vided industry, government and the public with annual

estimates of proved reserves of natural gas and natural

gas liquids in the United States. In 1969 the AGA re-

ported the first annual decline of natural gas reserves in

the United States. That decline was one of the earliest

harbingers of the present energy crisis and elicited

widespread concern. It was asserted in Congress that

the reported decline in proved reserves did not accur-

ately represent the availability of natural gas in this

country, but was instead the result of alleged collusive

reporting by natural gas producers, upon whose reports

the AGA estimates are based. The FTC investigation

pursuant to which the instant subpoenas were issued

was undertaken in response to that assertion.*

The Federal Power Commission

As part of its statutory responsibility to regulate gas

prices, the Federal Power Commission had, just prior

to the AGA’s 1969 report, concluded a proceeding to es-

tablish area-wide rates for Southern Louisiana, the

largest natural gas producing area in the United States

(So Lal).* Beeause of the growing shortage of natural

gas the F PC, almost immediately after that proceeding,

commenced a second proceeding to reconsider rates for

Southern Louisiana gas (So La I1). The main purpose

of the new investigation was to determine whether, in

*See App. at A7.

* Area Rate Proceeding (Southern Lowisiana), 40 FPC 530

(1968), modified on rehearing, 41 FPC 301 (1969), aff’d sub nom.

Austral Oil Co. vy. FPC, 428 F.2d 407 (5th Cir.), cert. denied, 400

U.S. 950 (1970), aff’d per curiam, 444 F.2d 125 (5th Cir. 1970).

oo ae Ee

5

light of the diminishing supply, higher area rates were

required. in response to the contention of a party to

the FPC proceeding that the shortage was illusory be-

cause of alleged manipulations of AGA data, the FPC

investigation considered the reliability of AGA data

and the producers’ reports. The F PC’s proceeding was

adversarial in nature and testimony was subject to cross

examination. In its investigation, the F PC ordered the

producers to complete special questionnaires concern-

ing reserves. The completed questionnaires were sub-

ject to a staff audit. The FPC concluded its proceeding

in July, 1971. It rejected the false-reporting charge

and found that AGA estimates were an adequate basis

for ratemaking. That decision was affirmed by the

Fifth Cireuit and this Court.*

Subsequently, the FPC undertook, at the direction of

Congress, a comprehensive independent survey of na-

tural gas reserves which did not rely on the AGA figures

at any point. The final report issued in May 1973 con-

eluded that the AGA estimates of reserves were, if any-

thing, too high.°

The Federal Trade Commission

In late 1970 the FTC initiated its investigation into

the reporting of natural gas reserves in Southern

Louisiana. From the beginning of the investigation

the AGA cooperated voluntarily. Substantial quan-

tities of data and documents were produced from com-

pany and AGA files, including the field-by-field esti-

5 Area Rate Proceeding Offshore Southern Louisiana, 46 FPC 84,

114-16 (1971). aff’d sub nom. Placid Oil Co. v. PPC, 483 F.2d 880

(5th Cir. 1973), aff’d sub nom. Mobil Oil Corp. v. FPC, 417 US.

283 (1974).

®*FPC Staff Report on National Gas Reserves Study (May

1973). See App. at A87.

6

mates of proved reserves made by each Southern

Louisiana subeommittee member in 1966 through 1970.

Members of the AGA subcommittee voluntarily gave

depositions. See App. at A8-9, A72.

On June 3, 1971, the FTC issued a resolution au-

thorizing compulsory process, and on November 24,

1971—after the FPC had concluded its proceeding in

So La I1—the FTC staff issued the instant subpoenas

to eleven natural gas producers including Petitioner.

The exceedingly broad subpoenas sought massive

quantities of proprietary technical data and estimates

of every type respecting natural gas reserves includ-

ing, but by no means limited to, the producers’

‘treasure maps’’. All producers promptly moved to

quash. The Commission denied the producers’ motions

on June 27, 1972.’

The District Court

As authorized by § 9 of the Federal Trade Commis-

sion Act, petitions for enforcement of the subpoenas

were filed in the District Court on June 4, 1973. A

hearing on preliminary motions was held on July 30,

1973. After briefing and submission of evidentiary

materials by the producers and the FTC, a full hear-

ing on the issues was held on December 13, 1973. The

District Court issued an order on March 22, 1974, en-

forcing six of the subpoenas’ twelve specifications in

full, and six in part. The order upheld the FTC’s

right to conduct an investigation, but noted the con-

tentions of Petitioner and other producers that com-

pliance with the subpoenas as issued would be need-

lessly burdensome and irrelevant to any proper subject

of investigation. The order further took account of

the fact that the FPC had already investigated the

7 App. at A258. Subsequently, three of the eleven complied with

modified subpoenas. Id. at A10-11.

- ———-

7

accuracy of the natural gas reserve estimates and found

them reliable. Accordingly, the District Court ap-

proved the subpoenas with modifications:

(a) Compliance was ordered respecting documents

concerning proved reserves, the only estimates reported

by the AGA, thus eliminating highly speculative and

commercially sensitive data concerning unproved

deposits.

(b) Initial compliance was ordered respecting 100

fields to be selected at random from the approximately

225 fields subject to the original subpoenas.

_ (e) Compliance was ordered respecting the years

1969-1971.

(d) Certain specifications were limited to the off-

shore area.

(e) Confidentiality protections were ordered and

the companies were permitted to produce documents

where stored.

The District Court specifically retained authority to

grant the FTC further discovery.

The Circuit Court

The FTC did not avail itself of any of the relief it

obtained from the District Court, but instead appealed

those portions of the District Court’s order limiting

the subpoenas. On August 8, 1975, a three judge panel

unanimously upheld the District Court’s order in all

respects except the provision limiting production to

the years 1969-1971 which was extended to the full

period sought by the FTC.’ At that point, the FTC,

still not proceeding with either the discovery the Dis-

® The panel included Circuit Judges Wilkey and MacKinnon and

District Judge Jameson, the latter sitting by designation pursuant

to 28 U.S.C. § 294(d).

8

trict Court permitted or the additional discovery per-

mitted by the panel, petitioned for and received re-

hearing en bane. A four-judge majority of the en ban:

Court, two judges dissenting,” upheld the subpoenas

as issued, with two exceptions (concerning raw field

data and the suspected locations of natural gas in cur-

rently unleased acreage), the exceptions having been

previously proposed by the FTC for settlement pur-

poses. Also, notwithstanding that the issue was not

before it, the en bane Court reduced by half the time

provided by the District Court for compliance.

REASONS FOR GRANTING WRIT

1. Contrary to This Court’s Decisions, the Circuit Court Has

Removed Any Authority in the Courts To Modify Admin-

istrative Subpoenas for Burden oz Relevance or To Protect

Confidentiality. :

The standard of review of administrative subpoenas

applied by the Cireuit Court effectively removes any

authority in the courts to modify administrative sub-

poenas and reduces the courts to rubber stamps of

administrative action. Although administrative agen-

cies have broad powers to issue subpoenas, Oklahoma

Press Pub. Co. v. Wa!ling, 327 U.S. 186 (1946) ; United

States v. Morton Salt Co., 338 U.S. 632 (1950), those

powers are not unlimited:

It is now settled that, when an administrative

agency subpoenas corporate books or records, the

Fourth Amendment requires that the subpoena be

sufficiently limited in scope, relevant in purpose

and specific in directive so that compliance will

® The majority opinion of Judge Bazelon was joined by Judges

Wright, Leventhal and Robinson. Judge Wilkey dissented joined

by Judge MacKinnon. Judges McGowan, Tamm and Robb recused

themselves,

9

not be unreasonably burdensome. See v. Seattle,

387 U.S. 541, 544 (1967).

It is the duty of the district court to which enforce-

ment of adininistrative subpoenas is entrusted to ex-

amine those subpoenas and to keep them from being

oppressive dragnets. See, e.g., See v. Seattle, supra at

544 (1967); Oklahoma Press Pub. Co. v. Weall-

ing, 327 U.S. 186, 208-09 (1946); Chapman v. Maren

Elwood College, 225 F.2d 230, 234 (9th Cir. 1954).

That is precisely what the District Court did in this

ease. After receiving extensive submissions from all

parties and holding two days of hearings in which the

FTC stated the actual scope of its investigation, the

District Court enforced the subpoenas modified to

delete irrelevant and oppressive portions.

The four judges of the en banc majority, on the other

hand, failed to make any factual investigation of rele-

vance or burden, although they substituted their judg-

ment on those issues for the District Court’s. The only

modifications which the Circuit Court adopted are those

the agency itself proposed in settlement negotiations.

App. at A44. With respect to burden, as discussed be-

low, the majority simply asserted that the courts may

not even take into account duplicative and overlapping

investigations of sister agencies.

The extent to which the majority rubber stamped

the FTC is illustrated by its response to the FTC’s

request for modification of the Court’s opinion. On

the FTC’s motion, the majority modified its opinion

to provide that the confidentiality provisions in this

case have no precedential value. See App. at A165-

66. The majority’s complete deference to the FTC

denies effective judicial review and thus precludes

the protections which this Court has always held

available to persons subject to subpoenas.

10

2. The Decision Below Alters the Established Standard of

Review of District Court Decisions Respecting Administra-

tive Subpoenas by Allowing the Reviewing Court to Reverse

the District Court on Fact Issues Without Any Finding of

Abuse of Discretion or Clear Error.

The en bane majority’s decision sharply alters the

historic roles of the trial court and the reviewing court

in the enforcement of administrative subpoenas. If

left standing, the decision would permit a circuit court

simply to substitute its view for that of the trial court

whenever questions of relevance or oppressiveness are

raised,"

Determinations of relevance and burden are, of

course, matters committed to the diseretion of the dis-

trict court and are not to be overturned without a find-

ing of abuse of discretion or clear error. See, e.g.,

United States v. Nixon, 418 U.S. 683, 702 (1974); FTC

v. Lonning, 539 F.2d 202, 211 (D.C. Cir. 1976). Ex-

cept as to the District Court’s limitation of the sub-

poenas to the years 1969-71, no reviewing judge has

made any such finding in this case."' Rather, the ma-

jority avoided the established rule by finding that the

District Court too narrowly conceived the scope of the

FTC’s investigation, a finding which the majority mis-

characterized as a question. * law. See App. at A22,

A25 n.29, Having placed th. “istrict Court’s find-

ings of relevancy and burden in that context, the

This Court recently has in other cases had to exercise its

supervisory powers over this circuit because the Circuit Court

improperly substituted its judgment on review. NLRB v. Pipe-

fitters, 45 U.S.L.W. 4144, 4150 (Feb, 22, 1977); FPPC v. Trans-

continental Gas Pipeline Corp., 423 U.S. 326, 331 (1976).

™ The sufficiency of the District Court’s findings is discussed at

length in the dissenting opinion. App. at A93-134.

11

majority then simply substituted its own view of the

facts for that of the District Court as to the proper

scope of the subpoenas.

The majority violated the elementary principle

that the scope of an agency investigation and

determinations of relevance of process pursuant

to it are puherently tied together; the question

of relevance cannot be separated from the district

court’s factual investigation of the agency’s intended

scope of investigation. See Montship Lines Ltd. v.

Federal Maritime Bd., 295 F.2d 147, 155 (D.C. Cir.

1961); Hellenic Lines, Ltd. v. Federal Maritime Bad.,

295 F.2d 138, 140 (D.C. Cir. 1961); FTC v. Green,

252 F.Supp. 153 (S.D.N.Y. 1966). To assess rele-

vance it is essential to know the purpose of the investi-

gation. Jd. Absent such comparison, the concept of

relevance would be meaningless.

The FTC resolution establishing an investigation

and authorizing the subpoenas in question is extremely

vague and overbroad and would on its face have per-

mitted the FTC to require the production of virtually

every document in Petitioners’ possession.” It is in

just this type of case that the role of the district court

in determining the permissible scope of administrative

subpoenas is vital. District courts have enforced sub-

poenas pursuant to very broad agency resolutions, but

only where the courts found a narrower focus of in-

- vestigation which justified enforcement of the issued

subpoenas. See, e.g., FTC v. Green, supra, where the

court upheld an administrative subpoena issued to a

broad resolution only after finding:

[I]t is evident from the nature of the data here

sought that the Commission is_ investigating

12 See App. at A287.

12

whether Standard Brands or other manufacturers

are selling below cost or otherwise engaging in

price discrimination not justified by costs. Id. at

156.

Before making its findings of relevance the District

Court carefully inquired of 'TC counsel regarding the

actual scope of the FTC’s investigation. FTC counsel

responded as follows:

[FTC CounseL]:... [W]hat we are investigat-

ing is possible collusive conduct by the natural gas

producers in the reporting of these reserves.

[FTC CounseL]: ... What we want to find out

is whether or not in reporting natural gas reserves

there has been collusive conduct in the way

these estimates are prepared.

THE Court: Reporting them to whom.

[FTC CounseL]: All right. Reporting them to

the American Gas Association, because the Ameri-

ca Gas Association data is the only available pub-

lished data on these reserves. App. at A95-96.

These statements are binding on the FTC, see United

States v. Star Construction Co., 186 F.2d 666, 669 (10th

Cir. 1951), but even if they were not binding, FTC

counsel’s representations are unquestionably a proper

element for consideration in the District Court’s

fact finding. Partly on the basis of these repre-

sentations, the District Court enforced the subpoe-

nas with limitations. Without the limiting explana-

tions of counsel, the Court might well have had to

refuse enforcement altogether. See Montship Lines

“itd. v. Federal Maritime Bd., 295 F.2d 147, 155 (D.C.

Ni en eI

13

Cir. 1961) ; FTC v. Green, 252 F. Supp. 153 (8.D.N.Y.

1966).

The Cireuit Court decision subverts the historic allo-

eation of responsibility between trial and appellate

courts. If investigative subpoenas are to be promptly

enforced and agency investigations are to go forward

expeditiously, it is essential that trial courts be per-

mitted to resolve inherently factual disputes. To allow

appellate courts to substitute their judgment on the

issues of relevancy and burden would greatly erode the

district courts’ authority, contribute to delay and frus-

trate enforcement, as the instant case illustrates. The

District Court’s order herein was issued more than

three years ago. Instead of proceeding under that

order, obtaining most of what was originally sought,

and returning for additional discovery as the District

Court expressly permitted,” the FTC stayed its in-

vestigation while seeking time-consuming appellate

review. The majority’s apparent endorsement of the

FTC’s dilatory approach invites needless appeals and

requires extensive and duplicative appellate inquiry

into factual matters determined below. Reaffirmation

by this Court of the proper scope of review in this

ease would discourage such delays and needless burdens

on already clogged appellate courts.

The error in the majority’s whole approach is well

summarized in the words of the dissent:

The majority has engaged in a standardless,

directionless review in this case, and no euphem-

ism can disguise this embarrassing fact. The

majority opinion demonstrates this assertion by

failing to even define the purpose of the FTC in-

18 See App. at A61.

14

vestigation which is being subjected to de novo re-

view, although the trial court had elucidated this |

quite well from FTC counsel. ... The failure to

focus on the FTC’s purpose in turn causes the

majority to roam into those areas committed by

precedent to, and more appropriate for, the dis-

trict court. ...

The enlarged role which the majority has as-

signed to this court in this case distorts the proper

relationship between the federal agencies, the fed-

eral trial courts, and the federal appellate courts.

In so doing, the majority sets a pernicious prece-

dent for future trials de novo which would leave

the Court of Appeals as the primary determinant

of factual matters more properly suited for the

District Court.

The strength of this sloppy precedent is, of

course, weakened by the composition of the

en bane court in this case; here the majority con-

sists of only four of our colleagues. It is our hope

that the approach adopted by this diminished ma-

jority of the court will not be carried over into

future cases. If it is attempted to be so applied

in the future, it will be a divergence from ac-

cepted practice of such magnitude that a close

examination by our full court will be warranted,

if the errors of our four colleagues have not

already received their just reward from an even

higher authority. App. at A163-64.

3. The Circuit Court Decision Eliminates Any Authority in the

District Court To Limit the Burden of Administrative Sub-

poenas Resulting From Duplicative Investigations by Sister

Federal Agencies.

The en bane majority not only rejected any preclu-

sive effect of the FPC fact determination, but even

prohibited the District Court from taking into account

the FPC’s findings in determining whether the FTC

a

15

subpoenas were oppressive. The effect of that deci-

sion is to deprive the district courts of all authority to

coordinate or limit administrative subpoenas where

jurisdictional or investigative overlaps occur.

The proliferation of repetitive demands is clearly a

proper factor to be considered in assessing the burden

of administrative subpoenas. See Application of Con-

sumer’s Union of United States, Inc., 27 F.R.D. 251,

254 (S.D.N.Y. 1961). Yet the majority’s position ap-

pears to be that the repetitive and cumulative nature of

subpoenas should be ignored when it is the result of de-

mands of multiple Government agencies. See App. at

A38-40.

Judicial discretion to avoid the whipsaw effect of

repetitive demands of multiple. Federal agencies is

particularly needed where Federal agencies conduct

overlapping investigations. Obviously, agencies have

different statutory responsibilities and must be al-

lowed to carry out the duties which Congress assigned

them. That point was carefully observed by the Dis-

trict Court, which specifically found ‘‘that the Trade

Commission is authorized to pursue the investigation

to determine whether there exists any evidence of con-

spiracy ...’’ App. at A57. At the same time, no

Federal agency is a sovereign unto itself. Each is

part of the United States Government; where one has

authority to bind the United States, all will be bound.

See S & E Contractors, Inc. v. United States, 406 U.S.

1, 10 (1972); Sunshine Coal Co, vy. Adkins, 310 U.S.

381, 402-03 (1940). This principle requires that dis-

trict courts have discretion to determine whether re-

petitive agency demands are needlessly burdensome.

16

District court discretion is particularly vital where,

as here, sister agencies of the Government become in-

volved in ‘competitive’? activity. If the Cireuit

Court’s decision stands, district courts will be power-

less to ameliorate the effects of identical demands of a

‘‘competing’’ agency. Without judicial control this

quickly leads to a situation in which no response to

an agency is ever sufficient because of the appetite of

‘‘competing’’? agencies to reexamine the matter to

show the inadequacy of the other agency’s efforts.

To avoid that unseemly and prejudicial effect, this

Court should affirm the view of the Circuit Court’s

dissenters which would

leave it to the sound discretion of the district courts

to determine whether the effort and expense in-

volved in responding to repetitive agency demands

imposes an unfair and unreasonable burden on the

responding parties. Being another essential fac-

tual determination, this has always been, and

should remain, the province of the district courts.

App. at A130.

4. The Decision of the Court Below to the Extent It Deter-

mines the Issue of Collateral Estoppel Resolves an Important

Point of Law in Conflict with Decisions of This Court and

Other Circuits.

Petitioner has urged in these proceedings that col-

lateral estoppel is not an issue which needs to be ad-

dressed in this case, and that the decision of the District

Court is fully sustainable as an exercise of its discretion.

Nevertheless, the en banc Court asked counsel for argu-

ment on the question of collateral estoppel. . The maj-

ority found that collateral estoppel could not be raised

at thig stage, thus denying petitioners the beneficial

ee ie

17

effects which collateral estoppel is supposed to have.

App. at A34-36. Judge Leventhal, concurring, went

even further, stating that ‘‘the whole doctrine of pre-

elusive effect whether cast as collateral estoppel or res

judicata is inapplicable to the conclusion of an agency

exercising such a legislative function as ratemaking.’’

App. at A-65. The dissenting judges took the contrary

position and relied on collateral estoppel as an alterna-

tive independent ground for sustaining the District

Court decision. App. at A134-58.,

Having addressed the issue and having declined to

give preclusive effect to the relevant FPC fact determi-

nations, the Cireuit Court determined an important

question of law in conflict with decisions of this Court

and other Circuits. See United States v. Utah Con-

struction Co., 384 US. 394, 421-22 (1966) ; Safir v. Gib-

son, 432, F.2d 137 (2d Cir. 1970) (Friendly, J.), cert.

denied, 400 U.S. 942 (1970) ; United States v. Willard

Tablet Co., 141 F.2d 141 (7th Cir. 1944); George H.

Lee Co. v. FTC, 113 F.2d 583 (8th Cir. 1940). The de-

fects of that position and its adverse consequences are

well set out in the dissenting opinion of the Circuit

Court. App. at A134-58. See also the accompanying

Petition of Exxon Corp., et al., for Certiorari.

18

CONCLUSION

For the reasons stated in the dissent of Judges Wil-

key and MacKinnon, and herein, a writ of certiorari

should issue in this case.

Respectfully submitted,

LEE LOEVINGER

MARTIN MICHAELSON

JosePH C. BELL

815 Connecticut Ave., N.W.

Washington, D.C. 20006

(202) 331-4500

Attorneys for Petitioner

Standard Oil Company of

California

Of Counsel:

Hogan & HARTSON

815 Connecticut Ave., N.W.

Washington, D.C. 20006

April 15, 1977