Appeal from an order of the United States District Court for the Southern District of New York, Charles L. Brieant, Jr., Judge, denying enforcement to portions of civil investigative demands issued by the Justice Department pursuant to the Antitrust Civil Process Act, 15 U.S.C. §§ 1311-1314.
Kaufman and Kearse, Circuit Judges, and MacMahon, District Judge.*fn*
This appeal from a district court order setting aside certain portions of Civil Investigative Demands ("CID's") issued by the Justice Department pursuant to the Antitrust Civil Process Act, 15 U.S.C. §§ 1311-1314, presents difficult issues of first impression.
With due regard to the manifest authority of the executive branch to conduct antitrust investigations, we are called upon to weigh the Government's legitimate need for requested information against appellees' claim that disclosure will interfere with both their unquestioned right to petition government agencies and the smooth functioning of foreign relations. More specifically, we are required to determine whether appellees' communications with the U.S. Federal Maritime Commission are shielded from Justice Department inquiry by the Noerr-Pennington doctrine, and whether the so-called "act of state" doctrine prohibits this Court from enforcing the Government's request for communications between the appellees and governmental bodies in Australia and New Zealand. Because we believe that under the circumstances of this case, neither the Noerr-Pennington doctrine nor the act of state doctrine should be applied to bar enforcement of the challenged CID's, we reverse the order of the district court.
Since this case reaches us well before any determination has been made to charge an antitrust violation, there are no pleadings to which we can refer and the facts relevant to this controversy over the production of documents must of necessity be stated briefly.
Spurred by complaints from independent ocean carriers concerning their alleged illegal exclusion from certain international shipping, the Department of Justice began an investigation into possible antitrust violations committed by the principal carriers of meat, livestock and wool to the United States from Australia and New Zealand. The appellees, Associated Container Transportation (Australia) Ltd. ("Associated Container"), Hamburg-Sudamerikanische Dampfschiffahrts-Gesellschaft, Eggert & Amsinck ("Columbus Line") and Farrell Lines, Inc. ("Farrell Lines") were among the targets of this investigation.*fn1
As substantial participants in the Australia/New Zealand-United States shipping market, appellees are members of various shipping conferences and agreements including the U.S. Atlantic & Gulf/Australia-New Zealand Conference, the Australia/Eastern U.S.A. Shipping Conference and the New Zealand/U.S. Atlantic & Gulf Shipping Lines Rate Agreement. These conferences hold regular meetings to discuss trade matters, non-conference competition and rate levels, and to decide upon rate increases or reductions. Conference members also enter written agreements establishing rates and regulations governing international shipping which are subject to approval by the Federal Maritime Commission ("FMC") pursuant to the Shipping Act, 46 U.S.C. § 814. The FMC will not approve agreements it finds to be "discriminatory or unfair [as between competing shippers],. . . or [which otherwise] operate to the detriment of the commerce of the United States. . . ." Id. It must also disapprove any agreements between carriers of different conferences which would otherwise be naturally competitive unless the arrangements provide that each carrier retain the right of independent action. Id. Only those agreements made lawful by the Shipping Act are immune from the antitrust laws. Id.*fn2 The activities of conference members allegedly outside this antitrust exemption were the primary focus of the Justice Department's inquiry.
To further its investigation and to substantiate charges that appellees had engaged in illegal conduct such as predatory pricing, reciprocal dealing and group boycotts, the Department of Justice in May and June 1980 issued Civil Investigative Demands ("CID's") pursuant to the Antitrust Civil Process Act, 15 U.S.C. §§ 1311-1314. Virtually identical CID's were served on each appellee.*fn3 The Government requested detailed information concerning the shippers' activities including minutes from conference meetings, descriptions of internal firm structure, and copies of various shipping contracts. Most significant for purposes of this dispute, the Department of Justice also sought to obtain communications between the appellees and the U.S. Federal Maritime Commission and communications between appellees and the Australian Meat and Live-stock Corporation ("AMLC")*fn4 and the New Zealand Wool Board ("NZWB").
The AMLC is an agency of the Australian government, which oversees all aspects of the meat industry. No shipper may enter into a contract to export meat from Australia without AMLC approval. Section 14, Australian Meat and Live-stock Corporation Act, 1977, Joint Appendix ("J.A.") at 83-90. The New Zealand Wool Board performs similar functions for wool in New Zealand. New Zealand Wool Industry Act, 1977, J.A. at 102-108. The Department of Justice does not dispute that the AMLC and the NZWB are legitimate instrumentalities of their respective governments.
Each appellee filed a timely petition to set aside the CID's, pursuant to 15 U.S.C. § 1314(b). The appellees also served interrogatories on the Department of Justice seeking to discover in greater depth the substance of the Government's investigation. Overruling the Government's objections to appellees' queries, Judge Brieant held the appellees had a right to reasonable discovery since they alleged "facially legitimate objections to the authority of the Antitrust Division to investigate their activities." Associated Container Transportation (Australia) Ltd. v. United States, 502 F. Supp. 505, 510 (S.D.N.Y. 1980). The Justice Department then answered the interrogatories and cross-petitioned for enforcement of its CID's.
Judge Brieant granted the Government's cross-petitions in most respects and ordered the CID's enforced.*fn5 He concluded that the possible exemption from the antitrust laws provided by the Shipping Act, 46 U.S.C. § 814 was insufficient to shield alleged conduct such as reciprocal dealing, predatory pricing and group boycotts from antitrust liability. He also determined that complaints from competing shippers were an adequate ground to justify an investigation. In two important respects, however, the district court denied enforcement of the CID's.
The district judge accepted appellees' argument that their communications with the Federal Maritime Commissioner were shielded from government inquiry by the Noerr-Pennington doctrine which immunizes from antitrust prosecution "[joint efforts] to influence the passage or enforcement of laws." Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 135, 5 L. Ed. 2d 464, 81 S. Ct. 523 (1961). Accordingly, he refused to enforce those portions of the CID's which sought information concerning appellees' communications with the FMC regarding FMC Agreement Nos. 9450 and 10268 ...