UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
November 10, 1964
Petition of COLUMBIA BROADCASTING SYSTEM, INC.
The opinion of the court was delivered by: EDELSTEIN
This petition, denied on July 27, 1964, (opinion to follow) was brought pursuant to § 5(b) of the Antitrust Civil Process Act, 76 Stat. 548, 551 (1962), 15 U.S.C. § 1314(b) (Supp. V, 1964)
to set aside, or in the alternative, to stay compliance with a Civil Investigative Demand
(C.I.D.) served upon petitioner, Columbia Broadcasting System, Inc. (C.B.S.), by the Antitrust Division of the Department of Justice. The C.I.D. was issued in the course of an investigation to determine whether section 1 and section 2 of the Sherman Act had been violated by the alleged 'pricing of phonograph record manufacturing services at unreasonably low levels in an attempt to monopolize the phonograph record manufacturing industry.' Petitioner contended that the C.I.D. was unreasonable, unduly burdensome, and an abuse of power since it allegedly demanded information
that had been already supplied to the Federal Trade Commission, (F.T.C.), during the course of the Commission's overall investigation of trade practices within the record industry. That investigation resulted in the filing of a complaint against the petitioner by the F.T.C. in June 1962 which charged that C.B.S., inter alia, had monopolized or attempted to monopolize the phonograph record business. Trial on the charges ensued before the F.T.C. in January 1963 and lasted until August 1963. No findings of fact have been called to the attention of this court.
Petitioner is engaged in the manufacture and distribution of phonograph records. It is also one of a group of 'custom pressers' who manufacture ('custom press') records for record manufacturers who do not own their own manufacturing facilities. Although the Civil Investigative Demand referred to the 'pricing of phonograph record manufacturing services * * * in an attempt to monopolize the phonograph record manufacturing industry' the government conceded that the instant investigation is directed solely toward petitioner's 'custom services' operation.
Specifically, petitioner's contentions were as follows: first, that the C.I.D. should be quashed pursuant to Rules 30(b) and 45(d) of the Federal Rules of Civil Procedure as incorporated by § 5(e) of the Antitrust Civil Process Act, 15 U.S.C. § 1314(e) (Supp. V, 1964).
This contention was found to be without merit. Section 5(e) by its terms is purely supplementary. The legislative history of the Act clearly indicates that § 5(b), 15 U.S.C. § 1314(b) (Supp. V, 1964), which authorizes the challenge of Civil Investigative Demands in the federal district courts is to be read in conjunction with § 3(c)(1), 15 U.S.C. § 1312(c)(1) (Supp. V, 1964), which in turn sets forth the standard for determining the validity of such demands.
'The bill provides that the demand may be tested in a district court for the district in which the person designated in the demand is situated by the filing in such court of a petition for an order of such court modifying or setting aside such demand (Section 5(b)). The reasonableness of the demand would be determined upon the same test as the reasonableness or the requirements contained in a subpena duces tecum issued by a court of the United States in aid of a grand jury investigation of such alleged antitrust violations. (Section 3(c)(1)).' S.Rep.No.1090, 87th Cong., 1st Sess. 4-5 (1961); see H.R.Rep.No.1386, 87th Cong., 2d Sess. 4 (1962). U.S. Code Congressional and Administrative News, p. 2567.
Petitioner's second contention was that the demand violated the Federal constitution's prohibition against unreasonable searches and seizures. This contention was found to be equally without merit. If a C.I.D. is reasonable when tested by the standards applicable to a subpena duces tecum it does not violate the Fourth Amendment. See Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 194-209, 66 S. Ct. 494, 90 L. Ed. 614 (1946) ('the gist of the (Fourth Amendment) protection is * * * that the disclosure sought shall not be unreasonable.' Id. at 208, 66 S. Ct. at 505.)
Petitioner's final contention was that the duplication of information complained of is prohibited by § 3(c)(1) of the Act, 15 U.S.C. § 1312(c)(1) (Supp. V, 1964)
because this duplication 'would be held to be unreasonable if contained in a subpena duces tecum issued by a court of the United States in aid of a grand jury investigation * * *.'
The government argued, on the other hand, that conduct which violates 5 of the Federal Trade Commission Act may also violate the Sherman Act and thus be the subject of a separate suit by the Justice Department. This was clearly correct. Proceedings under § 5 do not 'in anywise relieve or absolve any person * * * from any liability under the Antitrust Acts.' 15 U.S.C. 45(e) (1958); see 15 U.S.C. § 51 (1958); F.T.C. v. Cement Institute, 333 U.S. 683, 694-695, 68 S. Ct. 793, 92 L. Ed. 1010 (1948); United States v. Cement Institute, 85 F.Supp. 344, 347 (D.Colo.1949); cf. United States v. Chas. Pfiger & Co., 205 F.Supp. 94 (S.D.N.Y.1962).
The government then reasoned that the power to bring suit for Sherman Act violations 'a fortiori' gave it the power to investigate to determine whether such an action should be brought.
Petitioner, however, did not deny the government's power to investigate; but denied the government's power to conduct unreasonable investigations.
Thus the only question before this court was whether the Civil Investigative Demand contained any requirement 'which would be held to be unreasonable if contained in a subpena duces tecum issued by a court of the United States in aid of a grand jury investigation of such alleged antitrust violation * * *.' 15 U.S.C. § 1312(c)(1) (Supp. V, 1964). Grand jury subpenas duces tecum have been upheld as reasonable if the documents required were: described with reasonable particularity, relevant to the investigation being conducted and the request covered a reasonable period of time. Oklahoma Press Publishing Co. v. Walling, supra; see e.g. Brown v. United States, 276 U.S. 134, 142-143, 48 S. Ct. 288, 72 L. Ed. 500 (1928); F.T.C. v. American Tobacco Co., 264 U.S. 298, 44 S. Ct. 336, 68 L. Ed. 696 (1924); Hale v. Henkel, 201 U.S. 43, 26 S. Ct. 370, 50 L. Ed. 652 (1906); In the Matter of Grand Jury Subpoena Duces Tecum, Addressed to Provision Salesmen and Distributors Union, Local 627, AFL-CIO, 203 F.Supp. 575 (S.D.N.Y.1961). It has been stated that where the requesting government agency already has in its possession copies of many of the documents, the subpena to that extent is unreasonable. Application of Linen Supply Co., 15 F.R.D. 115, 119 (S.D.N.Y. 1953); cf. Petition of Gold Bond Stamp Co., 221 F.Supp. 391, 398 (D.Minn. 1963), aff'd Gold Bond Stamp Co. v. United States, 325 F.2d 1018 (8th Cir. 1964); In the Matter of Grand Jury Proceedings, 1959 Trade Cas. P69,590 (S.D.N.Y.1959); Jack Loeks Enterprises, Inc. v. W.S. Butterfield Theatres, Inc., 20 F.R.D. 303 (D.D.Mich.1957) (Civil anti-trust action). But cf. In re Motions to Quash Subpoenas Duces Tecum, 30 F.Supp. 527, 531 (S.D.Cal. 1939) (much of material previously furnished to a different governmental agency); Application of Texas Co., 27 F.Supp. 847 (E.D.Ill.1939) (material relevant to continued illegal practices subsequent to prior prosecution). Petitioner, in effect, would have had this court treat possession by the F.T.C. as possession by the Antitrust Division of the Justice Department. Conceding arguendo the validity of that equation, petitioner failed, in fact, to show that a significant number of the items requested in the C.I.D. were furnished to the Federal Trade Commission. Careful examination of petitioner's affidavits revealed that of the nine items demanded in the C.I.D. only two had been completely supplied to the Commission.
Moreover, petitioner's reply to the demand for reports and other documents dealing with sales costs and profits
affirmed merely that the 'bulk' of this data was supplied. In relation to another demand, petitioner's counsel was 'unable to recall' whether the F.T.C. requested custom pressing price lists
but believed that these were obtained by the Commission indirectly through some of petitioner's customers. Petitioner's other allegations of duplication were equally tenuous.
Clearly the petitioner had not shown that the C.I.D. was unreasonable and therefore its petition to quash was denied.
Petitioner's alternative prater to stay the Civil Investigative Demand until the disposition of the Federal Trade Commission proceeding was also denied. No purpose would have been served by awaiting the Commission's findings. Such findings are not binding on litigation brought under the Sherman Act. 15 U.S.C. § 45(e), 51 (1958); see United States v. Chas. Pfizer, supra, 205 F.Supp. at 96-97.