Grolier, Incorporated

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IN THE MATTER OF GROLIER, INCORPORATED Docket 887,9. Interlocutory Order, March 10. 1.981 ORDER GRANTING DISCOVERY IN PART; DENYING DISCOVERY IN PART AND "CLARIFYING" SEPTEMBER 12, 1980 ORDER On September 12, 1980, we issued an order reopening this proceeding to comply with the mandate of the Court of Appeals for the Ninth Circuit in Grolier, Inc. v. FTC, 615 F.2d 1215 (9th Cir. 1980). On November 6, 1980,' respondent Grolier, Incorporated Grolier ), filed motions for discovery and "clarification" of our Order. The memorandum ("Resp. Memo. ) accompanying the motions argued that the Commission had issued an order that "contradicts" the mandate of the Ninth Circuit (Resp. Memo. 6) and sought to justify extensive discovery. On November 26, 1980, complaint counsel filed an answer ("Answer ), with accompanying affdavits which contends that additional discovery is not necessary. Finally, on December 22, 1980, Grolier filed a motion for leave to fie a reply memorandum and a request for additional discovery. Upon review it is difficult to escape the conclusion that Grolier motion for "clarification" is largely designed to delay this proceeding. The only "clarification" sought is whether the September 12 Order requires "Grolier to follow a procedure different from what the Ninth Circuit mandated." Resp. Memo. at 6.' The answer is that it does not. As noted above, the Ninth Circuit' s remand was premised on the fact that it believed Grolier was improperly denied any knowledge of Judge von Brand's prior participation in this case. The Court of Appeals, however, was unaware that an FOIA request identical to Grolier s original discovery motion, had yielded all but 28 documents prior to remand. Our Order (Order at 2) invited the parties to comment on whether the release of those documents rendered the original discovery motion moot. Grolier chose not to comment. We, therefore, hold that, with our action today, Grolier original discovery request for documents has been granted in its entirety. We do not believe the Court of Appeals intended the By the terms of tb" Commission s order of September 12. 19.HO. Gralier was allowed to renew its motion to disqualify Judge von Brand if it desired. and required to present the Commissioll with specified evidence on questions relevant to the mution by October 2:-1, l!J80. On Septemb!or 29 19i:W Grolier sought additional time purportedly to review the documents it had posseswd for several yt'ar;; by virtue of a l"OIA request, before responding to the COlImission s order.

, In sef'kin;o"ddit.ional tim( on September ::m, 191:0,Grolier did not al1ude to any uncertainty as to what. the Commission had !)rdered it to do and suggested to the Commission only that the additional Lime ,I. requested was necessary to examine the docl1ments ,I. had fI'ceived years ago under t.he FOIA, so that it could point to specific Fact'; that. demlJnstrated Jodge VOl' Brand should be disqualified. 194 Interlocutory Order Commission to elevate form over substance and search the same documents repeatedly' simply to provide them in formal response to Grolier s discovery motion. The doc-uments ,Grolier has, and has had for some time ' along with the documents we maki,available by thisorder and the affidavits of Judge von Brand and former Commissioner MacIntyre should "adequately disclose the existence or nonexistence of ALJ von Brand' s involvement in prior Grolier matters, Grolier, Inc. v. FTC, supra. 615 F.2dat 1222. Now, according to the Court of Appeals; "Grolier, who has the burden of proof on the disqualification issue, may rightfully be obligated to offer evidence contradicting the sworn statements of the (FTC) Id. In its motion of November 6, 1980, Grolier seeks discovery beyond that which the Ninth Circuit ordered the Commission to consider. The requested discovery includes three depositions and ten categories of documents. Complaint counsel's Answer argues that most of this requested discovery wil not shed light on the question of whether Judge von Brand Was involved with information related to Grolier "received outside of the controlled adjudicative setting. " 615 2dat 1220.

Complaint counsel has examined the remaining twenty-eight documents involved in Grolier s original request arid not currently available to Grolier and states that none of the documents indicate they were "written, received or reviewed" by Judge von Brand. Affidavit of Edward B. Craig, IV, Complaint counsel also points out that a review of the Index to Documents' (Submission of Documents, Exhibit C) in the FOlA suit makes it clear that nothing in the withheld portions of the documents would reveal anything about Judge yon Brand's involvement with Grolier matters while he was an attorney-advisor. For example, the segments excised from the six documents in category A are only staff recommendations or opinions which could not reveal Judge von Brand's involvement. The documents in category B (Commission circulations) could only reveal whether Commissioner MacIntyre circulated a matter. Similarly the documents in category C (assignment sheets) could only reveal that a , The Com!IIissioll searched its fies two times at Grolier s req\le tin the f.'Ora f\.I:it. Submission of Documents in Respon e to the Commission s Ordcr of Septemoor 12, 1980 ("Submission of Documents"), Exhibits Band KIn addition. it responded tolengthy interrogatories from Grolier as to, the nature of the CommissiOli. s record keeping systems. Submission of Doci.niu!nt., Exhibit D. , Some uftbe documents were provided to Grolier as early as May 1976_ Asof June 1976. only 41do llment. were being withheld and some of those were partially released. In March 1979, the Commission released all of its blue minutes to Grolier with minor deletions- Submission of Documents, Exhibits BaJld G , The COl1rtof Appeals also would have a!lowedGrolier "to point out the inadequacy and inconsistency, ifany, in the sworn tatements.. before it could subpoena documents. 615 F.2d at 122. Since this order and the FOIA response make availab!ea!J the documents originally requested, this point is moot. . The district court in theFOIA suit reviewed the documents in camera.and found the documents were both accurately described in the Index and properly withheld. Submission of Documents. Exhibit F. 1\)6 FEDERAL TRADE COMMISSION DECJSIONS Interlocutory Order 97 F. matter was assigned to Commissioner. MacIntyre. Because the Ninth Circuit rejected Grolier s argument that Judge von Brand is chargeable with involvement in all matters before the Commission while an attorney-advisor, whatever Commissioner MacIntyre reviewed or did has little relevance to Judge von Brand' s "actual involvement" with Grolier information. 615 F.2d at 1221. Moreover, Mr. MacIntyre has provided an affidavit in which he states that he divided work in his office between investigative matters and adjudicative matters and only assigned adjudicative matters to Judge von Brand. Answer Exhibit A. Grolier also requests documents referred to in the blue minutes which the Commission has already released. But, Grolier already has four of these documents. Answer, p. 10. Two others involve requests by state attorneys general for access to information contained in the Grolier fie and do not concern the merits of the investigation. Answer, p. 10 and Exhibit B. The final document referenced contains a typographical error in the blue minute and, in any event, was prepared after Judge von Brand ceased to serve as an attorney-advisor. The last category of documents (staff notes on conversations with Grolier personnel) would not have come to the attention of the Commission.

Although the arguments summarized above do strongly suggest that the 28 documents in question, by their nature, could not shed light upon ALJ von Brand' s involvement with Grolier matters, and although the district court has ruled that the documents are properly withheld as privileged in the FOIA context, the Commission has determined, in the exercise of its discretion, to release these documents to Grolier.

Grolier s other discovery requests in the November 6, 1980, motion called for documents that do not exist or appear unnecessary, especially in view of Mr. MacIntyre s affdavit, and are denied. Grolier has also fied a "reply" in support of its discovery motion and requested yet a fourth deposition. A reply is not normally permitted under our Rules (16 C. R. 3.22(c)). While we will grant leave to fie the reply we deny the request for additional discovery. Grolier argues that Mr. MacIntyre s affdavit is at variance with Judge von Brand' s affidavit and our previous opinions. But Grolier is factually incorrect.' More fundamentally, Grolier misconstrues the Ninth , For "xl'mp!e. several! categoriesof documents ought conc",rn ilf'm ll1 Mr Madntyre s p..rsonal mes. Bui Mr, Macintyre states he has no such mes relating to Grolier, Answer, Exhibit A. Other categories of documents sought involve 1311Cummissirm cases io the relevant period that concerned encyclopedia sales or door-to-door sales on the ground th"y may be related I'ases because the sam", issues may!J.. ;nvo!v",d This r..quest is too swe"'ping and goes beyond th", crucial question we must answer 011 disqualification. e.. the ",extent to which the challenged adjudicator (Judge van Brand) was actually i!lvolved in his former position "with the case he is deciding:' fil5 F_ ;It 1 2L See "Isl)KroWr, lnc. Dodd :JW2. Order, June 5, !9HO , Then" simply is ria inconsistency betwef!n former Chairman Engman s perception that an attorney-advisor (Continued) GROLI.hH, l1 tj.

J94 Interlocutory Order Circuit's mandate to allow it endless discovery, The Ninth Circuit only required us to provide the documents Grolierrequested if there were inconsistencies in the affdavits dealing with Judge von Brand' prior involvement.. See note 5 supra. The Commission has now done this. Grolier has all the documents it originally requested; all the documents related to Grolier which came before the Commission while Judge von Brand served as an attorney advisor; the sworn . statements of Judge von Brand and Commissioner Maclntyre that they cannot recall his involvement with, or knowledge of, Grolier matters while he was an attorney-advisor. This wealth of materials far exceeds that available in R.A. Holman & Co. v. SEC, 336 :F.2d 446 452-54 (2d Cir, 1966) (the case the Ninth Circuit relied upon in ordering us to consider further discovery). There the Court held that it was not improper to refuse to allow depositions of the individual allegedly disqualified and others, when the party seeking disqualification received a summary of the investigation and sworn state ments that the individual did not have any "substantial knowledge of the facts in issue.

With the benefit of everything involving Grolier that was before the Commission during the period Judge von Brand served as an attorney advisor, Grolier must now present evidence of his "actual involvement" with the Grolier case and demonstrate with particularity, his involvement, with ex parte matters received outside the controlled adjudicative setting and relevant to facts in issue. (615 2d at 1220.) We expect Grolier to file a renewed disqualification motion "if it is appropriate" (Reply 1, n. 1), conforming to our Order of September 12, 1980, no later than March 30 1981.' Therefore, it is ordered, That Grolier is granted leave to fie its reply and Grolier s motion for discovery is granted insofar as it requests the twenty-eight documents withheld in the FOIA suit and denied in all other respects, and It is further ordered, That complaint counsel, upon receipt of this has access to the whole of his Commissioner s business " our statement that there is a ' public perception that an attorney-advisor has saine..0 knowledge of all matters rf!ceived the Commissioner s offce, . and Mr. MacIntyre sworn statement that he compartmentalized the functions his advisors performed. .First, what is at issue here.is not a quristioI1. ofpotential access or knowledge. but Judge von Brand' s "' tual involvement"' with Grolier facts- 615 F2d at 1221 Second, wt' are uniquely aware that each Commissioner has different offce policies. Finatly, and most import.nttheNinth Circuit specifkaHy rejected the applicability of our clearance ca.ses tothe disqualification context by observing that Grolier s approach would produce ao "urmccessarily unpractical approach" We do not seeaoy inconsistency either in the fact that to the best of Mr- Macintyre s reco!leetion Judgt' von Braod " never saw or knew about" Grolier matters and Judge von Bnmd'sstatement that he could not recal! such matters even. though he could not "flat!yruleout.. thcjJossibility. . In view of thefllct that GroHer has had virtually all the d()umcot. originally requested since 1976, the fact that Grolier . previously. led .the Commission to believe it was examioing those documents to comply with the Commission s order; 3tJd the fact that there are only 28 tJt'W documents to examirie, an eJltension of timewi!1 be granted only in the most extraordinary circumMances. 198 FEDERAL TRADE COMMISSION DECJSI0NS Interlocutory 97 F. order serve Grolier with unexcised copies of the twenty-eight documents withheld in the Grolier FOIA suit, and It is further ordered, That Grolier, if it desires, file a renewed motion to disqualify Judge van Brand, addressing the issues specified in our Order of September 12, 1980, no later than March 30 , 1981. Commissioner Pitofsky did not participate. BOISE CASCADE CUJ-U-' I:::J J99 Interlocutory Order