Kroger Company

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IN THE MATTER OF THE KROGER COMPANY Docket .9102. Interlocutory Order, Feb. , 1979 ORDER DENYING MOTION FOR Reconsideration AND DENYING MOTION To DISQUALIFY ADMINISTRATIVE LAW JUDGE Respondent has moved. for reconsideration of our recent order affrming the administrative law judge s ("ALJ") denial of respondent' s motion for discovery of certain documents in the fies of the Commission. Respondent has also moved to disqualify the ALl Montgomery K. Hyun, on the ground that because he had access to many of these same documents during his prior employment as attorney-advisor to former Chairman Engman, his continued participation (eates an actual or apparent irnpropriety. Respondent perceives an impropriety because "it appears that (Judge HyunJ may decide the case or have his reaction to evidence preconditioned by ex-record material and discussion on pertinent issues arising from his activities engaged in before becoming an administrative law judge." Affidavit of Stuart J. Land at 6. Judge Hyun declined to disqualify himself and certified respondent' s motion to the Commission, pursuant to Section 3..2(g) of our Rules of Practice. The Issue of Disqualification This case concerns inter a.lia. allegations that respond.ent, which owns a chain of supermarkets, mad€, comparative price c.aims about the relative costs to consumers of its products, which claims were based upon methodologically unsound price surveys. Judge Hyun accepted an assignment to this matter only on the basis, which he has expressly reaffrmed, that he had no recollection of advising former Chairman Engman on, or otherwise dealing with, any matter pertaining to respondent or to retail food advertising generally during his tenure as an attorney-advisor. Respondent has not suggested that the contrary is true. Thus, the only question with which we are presented here is whether disqualification of an administrative law judge is mandated where in his prior employment he had access to, but does not recall reviewing, materials which, respondent contends, might influence his reaction to record evidence and thus lead him to render a biased decision. The Nature of the Claim Judge Hyun resigned from the Commission in September 1973; the 302 Interlocutory Order preliminary investigation underlying the instant complaint was not opened unti December 1975, and the complaint itself was not issued until July 1977. Accordingly, respondent cannot and does not allege that the documents to which Judge Hyun had access bear specifically on the allegations against it. Instead, respondent avers that the Commission documents concern and would reflect upon the ease or difficulty of designing and implementing a methodologically valid retail food price survey generally. Collectively, respondent claims such documents would tend to be exculpatory in nature.' But, it is apparent, respondent could only benefit from any preconditioning of the mind of Judge Hyun resulting from his exposure to allegedly exculpatory information. To assert this disqualification claim, therefore, respondent fevers that at the time of Judge Hyun s resignation from the Commission, the exculpatory nature of the document may not yet have become evident, because the Commission s staff had not yet comprehended or reported the diffculties of devising a sound methodology. Thus, it is alleged, during his seven-month service as an attorney-advisor, Judge Hyun would have had access only to documents which might not prove to be exculpatory after all, and that he therefore may be "preconditioned," if one presumes he actually read or discussed the documents, to react other than positively to respondent' s defense asserting the unreasonable diffculty of conducting a methodologically valid survey. Disposition of the Motion for Disqualification Because we do not perceive an appearance of impropriety, we decline either to reverse our earlier determination concerning document production ' or to order the disqualification of the ALJ. Even if all the allegations contained in the moving affdavit are taken as true, respondent would stil fall short. As we have previously stated, an ALJ should be disqualified only upon an adequate showing of bias or prejudgment. Mere access to internal Commission documents tangentially relevant to a proceeding cannot be grounds for his dismissal, notwithstanding that such access has served, under our Rules of Practice, as grounds for denial of clearance to a former Commission employee who wished to appear as counsel for respondent in this litigation. See letter of November 16 1 On this basis, respondent has sought, unsucce fully, to have all such documents, including those which the ALJ has ruled are exempt from disclooure by reason of privilege, produced and admitted into evidence in this litigation Judge Hyun has, of course, ordered production to respondent of aU rl!ll!vlmt non-privileged factual materials, including ex;cu!patory information, in the presion of the Commission. , As note at the outset, we recentlyaffirmed ,Judge Hyun s denial of respondent' s motion for production of otherwise privileged Commission documents. Respondent has asked us, in connection with the mntio" for disqualification of ,JLld Hyun, to reconsider this determination, so that it might "lay bare facts which would either confirm or dispel the appearance of impropriety that now exists. ,. Motion for Reconsideration at 2. Interlocutory Order 93 F. 1978 to S. Mark Tuller, Esq. As we have noted previously, our clearance rules address issues wholly distinct from those pertinent to disqualification of a law judge.

The two instances cited by respondent in which disqualification was ordered by a Court of Appeals because an individual acting in an adjudicative capacity had gained knowledge of relevant facts while serving in a prior, non-judicial capacity, differ materially from this case and do not support respondent's contention that Judge Hyun must be disqualified.

In American Cyanamid Co. v. FTC, 363 F.2d 757 (6th Cir. 1966), it was proved that a member of the Commission, in his role as Chief Counsel to the Subcommittee on Antitrust and Monopoly of the Senate Judiciary Committee, had personally investigated the same facts and issues concerning the same parties named as respondents in an administrative proceeding, prior to adjudicating that proceeding in his subsequent role as Chairman of the Commission. The decision plainly is not based on the Commissioner s access to pertinent information in his role as Chief Counsel but rather upon his extensive personal conduct, which the court held to be sufficient to unseat the presumption of impartiality. Indeed, the Court of Appeals specifically stated that the Commissioner s service, standing alone, as counsel to the subcommittee that was undertaking the investigation, would not necessarily require his disqualification. 363 2d at 768.

In United States v. Amerine, 411 F.2d 1130 (6th Cir. 1969), a criminal case, the court ordered the disqualification of a district court judge who had tried and sentenced a defendant against whom the original complaint had been issued during the period of the judge s prior service as united States Attorney. There are critical distinctions between Amerine and the instant case, even beyond the undeniable asymmetry of the criminal and civil laws. First, the complaint in this case was not issued until four years after Judge Hyun s resignation from the Commission, a salient distinction which eliminates any need for disqualification. See United States v. Wilson, 426 F. 2d 268 (6th Cir. 1970); Barry v. United States, 528 F.2d 1094 (7th Cir.), cert. den. 429 V. S. 826 (1976); United States v. Kelly, 556 , In the clearance context, the Commission s primary concern is with the perception that a former employee may have an advantage in representing a client by reason of having had access to nonpublic information, and aI a matter . of policy the Commission has decided to base its determinations on an essentially objective standardlikelihoo of acces and opportunity to be (!:Kposedto such information- rather than to rely solely upon the subjective standard of actual exposurc. In the pr ent context, however, respondent' s claim of di&jualilication rests largely upon the suppoed effects of actual expoure to certin information, and the Commission has concluded in any event that, under its precedents, even actual exposure would not be disqualifyinr;, e infra, Alternative Groufld for Disposition of Motion to Disqualify, there being no comparable problem of a former Commision employee using for private purpoes information acquired while a C.ommission employee ), 302 Interlocutory Order 2d 257 (5th Cir. 1977), cert. den., 434 U.S. 1017 (1978). Second, Mr. Hyun s role as attorney-advisor to a Commissioner is hardly akin to that of a United States Attorney, who exercises supervisory responsibility and at least nominally initiates charges and issues complaints. Finally, Amerine is of limited utility in any event, since the opinion rested solely upon a statutory construction of the former version of 28 U. C. 455, under which the judge was deemed to have been " counsel" to the government by dint of his former role as United States Attorney.

Finally, respondent urges upon us the current version of 28 U. 455(b) (1976), as amended in 1974, which mandates the disqualification of a federal judge who has "personal knowledge of disputed evidentiary facts concerning the proceeding" or who "participated as . . . advier. . . concerning the proceeding" while "in governmental employment." The proposed application of the statute to the facts at hand cannot be sustained. First, the statute on its face does not apply to administrative law judges,' and respondent' s argument that the court have so extended the statute, Application for Review of ALJ' Order of January 15, 1979 at 12, lacks support. There is considerable authority, apart from the application of maxims of construction which suggests that Section 455 does not apply to agency adjudicators, whose potential disqualification is to be tested instead against the standard set out in the Administrative Procedure Act ("AP A" See 5 U.s. C. 556(b) (1976); Securities and Exchange Comm v. R. A. Holman Co., 323 F.2d 284, 287 (D.C. Cir. cert. den. 375 U.s. 943 (1963); Converse v. Udall 262 F.Supp. 583 (D. Ore. 1966), affd, 399 2d 616 (9th Cir. 1968), cert. den., 393 U.S. 1025 (1969). The APA gives appropriate recognition to the varied functions performed by agencies which federal judges would not be expected to perform. Where Congress has not explicitly subjected agencies to the same strictures applicable to federal courts, it would be inappropriate to subject an agency s actions to the same standards. See generally Vermont Yankee Nuclear Power Corp v. NRDC, 435 U.s. 519 (1978); FTC v. Flotil Prds., Inc., 389 U.S. 179, 183-85 (1967); United States v. Morton Salt Co., 338 U.s. 632, 641-42 (1950). Second, assuming arguendo that the statute does apply, it does not require Judge Hyun s disqualification. The judge has specifically denied having any "personal knowledge" whatever concerning this proceeding, and he has specifically denied that he "participated as an advisor" concerning this proceeding. The authorities are also clear that under Section 455, a necessary precondition to disqualifi- . Only justices, judges, magtrates and referees in bankruptcy are expresly covered. ), Interlocutory Order 93 F. cation is that the proceeding in question have been initiated during the judge s prior tenure in a non-judicial capacity, a hurdle which respondent plainly fails to surmount here. See United States v. Kelly, supra; Barry v. United States. supra. In the absence of some evidence extrinsic to the discovery in this case, which suggests that Judge Hyun s stated recollections are mistaken, we see no basis for disqualification or even for further inquiry. There is nothing to suggest that the judge will decide the case on the basis of anything other than the record evidence. Respondent has failed utterly to demonstrate that Judge Hyun has a bent of mind that may prevent or impede impartiality of judgment. Bergerv. United States, 255 U.S. 22, 33-34 (1921). Alternative Ground for Disposition of Motion to Disqualify As an alternative and incbpendent ground for affrmance, the Commission is of the view that Commission rule and precedent, as well as the Administrative Procedure Act, dispose of respondent' a:arguments.

For example, Grolier, Inc. 87 F. C. 179, 180 (1976), affd 91 F. 486 (1978), contradicts respondent's posit.ion. There, the Commission held that even an ALJ's prior participation as an attorney-advisor in provid(ing J advice during the precomplaint stage of an investigation" would not alone be sufficient to order his disqualification on the grounds of alleged improper commingling of functions, possible bias, or possible exposure to information not later admitted into evidence. In the insta.nt case, of course, J lIdge Hyun has stated that he has no present recollection of participating in this matter, and we have no reason to question his statements. Cf National Nutritional Foods Ass v. FDA, 491 F.2d 1141, 1144-46 (2d Cir. cert. den., 419 S. 874 (1974); Hercules v. EPA, No. 77-1248, slip op. at 59-62 (D. Cir. Nov. 3, 1978). Judge Hyun s conduct thus falis well within the ambit of activity protected by Grolier. Neither is the relief sought by respondent required by the APA. Section 7 5 U. C. 556, of course, mandates impartiality, but does not aid respondent, because respondent has failed completely to overcome the strong presumption of honesty and fairmindedness attributed to agency adjudicators. See Withrow v. Larkin, 421 U. S. 35, 47 55 (1975). Indeed, under respondent's argument a Commissioner who had access to the same information as Judge Hyun could not then preside at the reception of evidence, a result clearly inconsistent with the AP A.

KROGER CO.

302 Interlocutory Order Disposition of the Motion for Reconsideration Respondent' s motion for reconsideration must be denied. Absent some extrinsic evidence of bias or prejudgment by the ALJ, respondent is not entitled to discovery of otherwse privileged documents to which it has sought and been denied access already in this proceeding. Cf United States v. Litton Industries, Inc., 462 F. 14 (9th Cir. 1972); R. A. Holman & Co. v. C, 366 F.2d 446 (2d Cir. 1966), cert. den., 389 U.S. 991 (1967). The naked conciusory allegation of bias, resting upon a hypothetical preconditioning of the mind of the ALJ resulting from hi possible expoure to documents which he does not recall, does not state a nee suffcient to overcome a proper assertion of privilege. Accordingly, It is ordered, That respondent's motion for reconsideration of the Orde;' Affrming Order Ruling on Respondent' s Motion for Production of Documents be, and it hereby is, denied. And It is further ordered, That respondent's motion for disqualification of the administrative law judge be, and it hereby is, denied. Commissioner Pitofsky did not participate. ouo FEDERAL TRADE COMMISSION DECISIONS Complaint 93 F.