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UNITED STATES v. GAF CORP.

April 13, 1978

UNITED STATES OF AMERICA, Petitioner,
v.
GAF CORPORATION, Respondent, EASTMAN KODAK COMPANY, Intervenor


Owen, District Judge.


The opinion of the court was delivered by: OWEN

OPINION AND ORDER

OWEN, District Judge

 This is a case of first impression arising under the 1976 amendments to the Antitrust Civil Process Act. At issue is whether compulsory process, called a civil investigative demand, can be used by the Antitrust Division of the United States Department of Justice to obtain from one party to a treble damage suit certain documents its adversary has furnished it pursuant to pretrial discovery.

 In April 1973, GAF Corporation (GAF) commenced a private antitrust suit against its competitor Eastman Kodak Company (Kodak) in this court, the action being assigned to Judge Marvin E. Frankel. To facilitate discovery, the parties entered into a stipulation whereby either party could mark documents sought by the other party "confidential." Documents so marked, when turned over to the opposing party's attorneys, could be disclosed only to employees or consultants retained by the attorneys for the purposes of that litigation, and to the court. If the attorneys receiving such a document desired to disclose it to anyone else or use it for any purpose other than the conduct of the litigation at hand, they could seek the producing party's permission, or failing that, the court's permission. In the absence of such special dispensation, however, matter marked "confidential" was to be used "solely for the purpose of conducting this litigation and not for any other purpose." This stipulation was made an order of the court by Judge Frankel on November 30, 1973.

 During the year that followed, some 400,000 documents were turned over by Kodak to GAF's attorneys, who sifted, analyzed, and categorized them in an effort to build their case. From this mass of material, GAF's lawyers selected fifty-two documents that they considered to be persuasive evidence of antitrust violations. It was -- and still is -- their desire to turn these documents over to the Antitrust Division, along with their explanatory memorandum. *fn1" They contend that it is their civic duty to report evidence of violations of the law to the appropriate authorities; it is not a secret, however, that such a move would also be good litigation strategy, since the initiation of a government action against Kodak during the pendency of GAF's civil action could be very helpful to GAF.

 The Antitrust Division, for its part, has been eager to receive this carefully selected set of documents and GAF's legal analysis of them. Twenty-five of these documents, however, had been initially produced by Kodak subject to the confidentiality stipulation, and although most had been declassified by the end of 1975, two still remained subject to that order. To be safe, GAF sought the court's authorization to disclose the contents of all fifty-two documents to the government in its investigation of Kodak.

 In GAF Corp. v. Eastman Kodak Co., 415 F. Supp. 129 (S.D.N.Y. 1976), Judge Frankel concluded that GAF should not be permitted to turn over to the government any discovered documents or analyses based upon them. In doing so, he relied in part upon his observation that

 
the parties have agreed, through discussions among counsel, that all documents produced in discovery, whether or not confidential, were to be used "solely for the purpose of this litigation."

 Id. at 130.

 Later that year there was enacted a substantial expansion of the investigatory powers of the Antitrust Division. *fn2" Prior thereto, the Division could issue a civil investigative demand (CID) only to a company under investigation, and only for the production of documents. As amended, the statute now authorizes such demands to be made upon natural persons as well as juridical persons, upon non-targets as well as targets of the Division's investigations, and for non-documentary as well as documentary evidence.

 Pursuant to this new power, the Antitrust Division, on March 29, 1977, served upon GAF its CID No. 1750, which commanded GAF to turn over not only the fifty-two documents and the legal analysis which were the subject of Judge Frankel's ruling, but also all other documents produced by Kodak in connection with the GAF litigation. GAF, though it was eager to comply, declined to do so for fear of violating Judge Frankel's order. Kodak, though not favoring the government having these documents, offered to supply them itself, presumably in the hope that the government would make its own de novo evaluation, free from GAF influence. The Antitrust Division, though it was anxious to obtain the documents, declined Kodak's offer because it preferred to receive them as screened and analyzed by GAF's antitrust counsel.

 The Antitrust Division undertook to break this stalemate by petitioning the court, pursuant to 15 U.S.C. § 1314(a) (1976), for an order compelling GAF to comply with CID No. 1750. Apparently realizing that Kodak had a substantial interest in any such proceeding, the government appropriately informed Kodak of this step. Kodak thereupon moved to intervene as of right in what otherwise would have had the appearance of a collusive suit between the United States and GAF. By order dated September 15, 1977, I granted Kodak's motion for intervention. The matter now has been fully briefed on all sides, and the issue is squarely presented: Do the 1976 antitrust amendments authorize the Antitrust Division to obtain from GAF documents furnished by Kodak, as processed by GAF's attorneys, notwithstanding the documents' availability from Kodak and notwithstanding the various confidentiality stipulations, understandings, and orders to which these documents have been subject throughout the years of litigation between GAF and Kodak?

 The government argues in essence that the amended statute is clear on its face. In language carried over from the original version, *fn3" the statute authorizes the issuance of CIDs to any person "in possession, custody, or control of any documentary material . . . relevant to a civil antitrust investigation." 15 U.S.C. § 1312(a) (1976). GAF, through its attorneys, is manifestly in custody of relevant Kodak documents; therefore the government contends that it has an unequivocal right to obtain those documents from GAF.

 The statutory scheme, however, is not quite that simple, and the phrase upon which the government relies cannot be read in isolation. To put the phrase into context, it is necessary to take into account the constant concern of Congress that the investigatory powers of the Antitrust ...


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