Sterling Drug Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF BRISTOL-MYERS COMPANY, ET AL. - D. 8917 AMERICAN HOME PRODUCTS CORPORATION, ET AL. - D. 8918 STERLING DRUG INC., ET AL. - D. 8919 Dockets 8917. 8918. 8919. Interlocutory Order. Nov. 11. 1977 Order remanding to the administrative law judge an order by him denying camera treatment of certain documents with instructions to grant in camera status only to those documents meeting the criteria set forth in the accompanying Commission opinion.

General Foods Corporation applies for review of the administrative law judge s June 28, 1977 order denying its motion for in camera treatment of certain documents. The law judge has determined that interlocutory review would be appropriate under Commission Rule Section 3.23(b). We entertain this appeal to clarify the standards as to when in camera treatment is warranted. The Commission s Rules, Section 3.45(b), provide that in camera treatment should be granted only in those unusual and exceptional circumstances when good cause is found on the record. It is well established that the person or corporation whose records are involved can satisfy this burden only by demonstrating that public disclosure of the documents wil result in "clearly defined, serious injury. H P. Hood Sons, Inc. 58 F. C. 1184, 1188 (1961). In this case, General Foods Corporation contends that it will sustain serious injury because disclosure of these documents wil provide competitors with the benefits of its research concerning consumer attitudes toward caffeine. In our opinion, however documents should not be sealed simply because an applicant asserts that its competitors would like to possess the information the documents contain. General Foods Corporation did not provide answers to such fundamental questions as what in rough terms these studies cost, or whether their competitors could replicate them today and at what cost. More importantly, it did not demonstrate that these studies are significant today. Therefore, we conclude that General Foods has not yet demonstrated on the record that public disclosure of these documents wil result in serious injury. We are impressed with the possibility, however, that the docu- I Nor is it relevant that Gtneral Foo CorporatiorI relied on complaint counsel's promis to support General Foo Corporation a motion to limit acces to r pondent' 8 counsel. That promis pertined only to thos portions of the documents not introuced into evidence, but given to respondent' s counsel for purpo of cr08-examination. As the law judge points out there has ben no ageement by complaint counsel not to offer thes documents as II (Continued) &:

Interlocutory Order 90 F. ments in question may warrant in camera treatment. General Foods Corporation does state that the efforts of several of its employees and outside consultants, and sigoificant marketing outlays, were involved in producing this research. It also maintains that this research is relevant to marketing non-caffeine coffee today and that its competitors would also find it useful. It has raised doubt in our mind as to the possibilty that it wil incur serious injury. For this reason, we remand this matter for further consideration, with the following guidance as to what constitutes "good cause" in terms of Section 3.45(b).

We do not believe that everything that is loosely called a trade secret in the world of commerce necessarily meets the standard that disclosure wil result in serious injury.' We cannot accept the logic of General Foods Corporation s argument that its research falls under the "trade secrets" rubric and therefore, should be accorded camera treatment regardless of any discussion of the seriousness of the injury. On the contrary, to warrant in camera treatment it must be shown that public disclosure of research, as in this case, or of any allegedly confidential business information wil result in clearly defined serious injury. This standard reflects the balance the Commission has struck between the need for a public record and the danger of discouraging business from producing and retaining socially valuable information. The "serious injury" standard is appropriate because the latter danger can only arise when the documents in question are secret and material to the applicant' business, and would less likely be produced if it were known that they had to be publicly disclosed. In all other circumstances, disclosure wil not cause serious injury and secrecy would have to give way to the strong Commission policy favoring a public record. Accordingly, we believe demonstrating serious injury requires the applicant to show that the documents are secret, that they are material to the applicant's business and that public disclosure wil plausibly discourage the future production of such information. We find the Restatement of Torts to be instructive regarding the first two criteria. The following factors should be weighed in considering both secrecy and materiality:

(1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and part of the public reord. Morever, the public policy behind un open reord is no les important, where complaint counsel doe not oppo in camera treatment. See.Natiorwl Dairy Pructs Q,rfNrotwn. 61 F. G 144., 1442 (1964); and Crown Cork SeICvmpany. 71 F. G1714, 1716(1967). , We nee not consider "trade &!rets" II.! defined by 15 U. c. 46(0 beuse that exception to 46(O il inapplicable to adjudiC8tive proceeings. HooSee at 1188-89. 455 Interlocutory ()rder others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his ompetitors; (5) the amount of effort or money expended by him i,' developing the information; (6) the ease or diffculty with which the information could be properly acquired or duplicated by others. Restatement of Torts g757, Comment bat 6 (19 9).

We would add that when considering (4), the value of the information, the law judge should place a greater burden on the applicant when the information is old. Regarding the final criterion, the law judge should consider whether the production of the information is required by law or whether the information would otherwise have been produced and retained regardless of whether it was to be publicly disclosed. Also, we note that wherever it would not defeat the purpose of the application, the applicant should demonstrate good cause using the most specific information available. In ruling on requests for in camera treatment the law judge should also consider the strength of the policies favoring disclosure in the particular factual context. Thus, the general and fundamental policy favoring government decisions based on publicly available facts may warrant different treatment for similar information depending upon the importance of the information to an understanding of the Commission s decisionmaking processes. Taking this approach. it may be reasonable in some cases, as Commission Rule 3.45(a) allows for the law judge to grant in camera treatment for information at the time it is offered into evidence subject to a later determination by the law judge or the Commission that public disclosure is required in the interests of facilitating public understanding of their subsequent decisions.

We note, to avoid confusion, that this appeal does not present questions regarding the terms or the advisabilty of any in camera order that might issue. Compare Mississippi River Fuel Corporation, 69 F. C. 1186 (1966); F.TC. v. Crowther, 430 F. 2d 510 (D.C. Cir. 1970); Ash Grove Cement Co., 77 F. C. 1671 (1970); Eaton Yale & Towne. Inc., 79 F. C. 998 (1971); and Pepsico, Inc. 83 F. C. 538 (1973).

Finally, consideration of the above factors, like other questions relating to the proper, fair and expeditious conduct of adjudicative hearings is a matter within the sound discretion of the administrative law judge.

Because the administrative law judge did not consider and could not have anticipated many of these issu s, this matter should be and Interlocutory Order 90 FTC. it will be remanded to the law judge for reconsideration of his order denying in camera treatment. In so disposing of the appeal, we intimate no view on whether said documents should in fact be afforded in camera treatment.

ORDER REMANDING CASE This matter having been heard and considered by the Commission upon the interlocutory appeal fied by General Foods Corporation from an order of the administrative law judge denying in camera treatment, and the Commission for reasons stated in the accompanying opinion having determined that General Foods Corporation failed to demonstrate good cause for in camera treatment. It is ordered, That this proceeding be, and it hereby is, remanded to the law judge with instructions that he grant in camera status only to those documents which upon reconsideration, after the parties have been afforded an opportunity to present their views thereon appear to warrant in camera protection in accordance with the Commission s views as expressed in the accompanying opinion. 459 Complaint