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Federal Trade Commission v. Dilger

April 4, 1960

FEDERAL TRADE COMMISSION
v.
WALTER L. DILGER, SECRETARY, BEATRICE FOODS CO.



Author: Hastings

Before HASTINGS, Chief Judge, KNOCH, Circuit Judge, and PLATT, District Judge.

HASTINGS, Chief Judge: This is an appeal from a district court order requiring respondent-appellant, Walter L. Dilger, as secretary of Beatrice Foods Co. (Beatrice), to comply with a subpoena duces tecum issued by the Federal Trade Commission, petitioner-appellee (Commission), in the course of a proceeding against Beatrice.

In the main proceeding,*fn1 out of which this ancillary action arose, the Commission filed a complaint against Beatrice on October 16, 1956, alleging in substance that Beatrice, through a series of 44 acquisitions of other corporations, violated the "merger" provisions of Section 7 of the Clayton Act, 15 U.S.C.A. § 18 (38 Stat. 731, as amended, 64 Stat. 1125); and, by those and a further series of 87 acquisitions of non-corporate businesses, violated the "practices" provisions of Section 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C.A. § 45(a)(1) (38 Stat. 717, as amended, 66 Stat. 632). During the course of hearings held since that time, Beatrice has furnished certain documentary evidence in response to three earlier subpoenas.

On December 30, 1958, the disputed subpoena was served upon Beatrice's secretary requiring him to produce:

"1. All schedules submitted to the Bureau of the Census on Form MC 20C by all plants, manufacturing establishments or units owned or controlled by your concern in conjunction with the 1954 census of manufacturers together with copies of all correspondence clarifying or amending said schedules or reports."

It has been understood by all parties that the subpoena demands the corporation's retained "copies" of the census forms or schedules prepared by Beatrice and now held in its corporate files.

The hearing examiner denied a motion by Beatrice to quash this fourth subpoena; and the Commission subsequently denied an interlocutory appeal therefrom, ruling that the corporation's retained copies of the census reports were not privileged, that the examiner could and should receive the records sought under appropriate orders to withhold from competitors the information therein set out, and that such information was material and relevant to the issues in the main proceedings. Subsequently, the hearing examiner ordered the subpoenaed documents produced under seal at a hearing set for May 5, 1959, the records to be received in camera and not to be made available for inspection by anyone other than parties to the proceeding. Compliance with the subpoena was refused and the hearing adjourned. The Commission thereupon instituted the instant action in the district court to enforce the subpoena.

The district court granted the Commission's enforcement petition and ordered Beatrice to produce its copies of the census reports for use in the Beatrice case and denied enforcement for two related cases against National Dairy Products Company and The Borden Company. This appeal is from the enforcement order in the Beatrice case. The Commission has not appealed from the denial in the other two related cases.

Appellant charges error in three adverse holdings by the district court; the contested issues arising therefrom may be summarized as follows:

I. Whether the provisions of Sections 8 and 9 of the Census Act, 13 U.S.C.A. §§ 8, 9, create a "privilege" prohibiting the production and use in litigation by the Federal Trade Commission against Beatrice of copies of census reports or schedules prepared by Beatrice and submitted to the Bureau of the Census, such "copies" having been retained by Beatrice in its corporate files?

II. Whether Section 8 of the Federal Trade Commission Act*fn2 requires the Commission first to attempt to obtain information from the Department of Commerce by a request to the President before issuing a subpoena or seeking its enforcement?

III. Whether the district court, in an ancillary subpoena enforcement proceeding, must hear evidence for the purpose of determining whether the record before the Commission in a pending administrative proceeding already contains evidence sufficient to enable it to decide the issues therein without the documents called for by the subpoena?

I.

The subpoena in question required the production of copies of all schedules prepared by Beatrice and submitted to the Department of Commerce, Bureau of the Census, on Form MC 20C in conjunction with the 1954 census. These schedules were prepared on forms furnished by the Census Bureau, and each ...


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