International Telephone & Telegraph Corporation

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IN THE MATTER OF INTERNATIONAL TELEPHONE & TELEGHAPH CORPORATION, ET AL.

Docket 9000. Interlocutory Order, March 1/1 981 ORDER DENYING REQUEST FOR REIMBURSEMENT OF EXPENSES By a brief fied with the Commission on September 29, 1980, Interstate Brands Corporation ("Interstate ) seeks to appeal the denial by Administrative Law Judge Brown of its motion of .July 24, 1980, for payment of costs incurred in the production of documents in response to a subpoena duces tecum. The subpoena, issued on September 19, 1979, at respondents' request as part of their deferred discovery of nonparties, called for the production of certain documents in Interstate s possession for inspection and copying respondents. On October 4, 1979, Interstate filed a motion to quash the subpoena on several grounds. Limiting the subpoena somewhat the ALJ otherwise denied the motion td' quash on October 17, 197 Interstate thereafter complied fully with the subpoena. On August 26, 1980, the ALJ denied Interstate s request for reimbursement of its costs of compliance, stating that "in (his) opinion, the Administrative Law Judge does not have authority to issue an enforceable order granting a money judgment against a respondent on behalf of a nonparty. ,,* Although Judge Brown s language is ambiguous, his order appears to state that while the Commission may exercise such authority in its discretion, the ALJ may not. If this holding was intended, then Interstate s motion of July 24 should have been certified under Section 8.22(a) of the Commission s Rules of Practice. See Crush International Limited, 80 F. C. 1028, 1024 (1972). In view of the ambiguity, and in order to provide guidance to ALJs on the appropriate treatment of such reimbursement requests, the Commission wil treat the present motion as having been certified. An ALJ does have the authority, in proper cases, to condition issuance of a subpoena upon an agreement to reimburse expenses of . Order Denying Motion of Interstate Brand!;Corporation for Compensation for the Production of Documents Subpoenaed as I''rt of Respnl1dents Discovery. at2. , RulesofPracticeSection:j,22(a)provides. in pcrtincntpart Any motion upon which the Administrutive Law Judge has 110 lIuthority to rule shah be cl'rtified by him to th" Commission with his recommendation wh..re he deems it apprupriate , In their response to tht' present motion, respondentscorrect!y puint out that Interstate has notrequt'sted or obtained certification ,,(this question by the ALJ. a prerequisite tt) interlocutory Commission review of the AL.J"s Aug-ust 21;, l!1!'O, order under Rule 32:J(b) of the Commission s Rules or Practicf'- Huwever, as discussed above. we shall treat the matter as properly before us under RLjle:122(a). JNTERNATIONAL TELEPHONE & TELEGRAPH CORP., ET AL. 203 202 Interlocutory Order compliance, or to deny a motion to quash on the condition that reimbursement be made. This authority is integral to the ALJ' general authority to "deny discovery or make any order which justice requires to protect a party or other person from annoyance, embarrassment, oppression, or undue burden or expense. Rules of Practice Section 3.31(c)(1). See also Fed. R. Civ. P, 45(b)(2). The standards applicable to reimbursement requests in adjudicative proceedings are essentially the same as those previously announced by the Commission with respect to investigative subpoenas.' A subpoenaed party is expected to absorb the reasonable expenses of compliance as a cost of doing business, but reimbursement by the proponent of the subpoena is appropriate for costs shown by the subpoenaed party to be unreasonable.' To determine whether expenses are "reasonable," the ALJ should compare the costs of compliance in relation to the size and resources of the subpoenaed party. See g., SEC v. OKC Corp., 474 F.supp. 1031 (N. D. Tex. 1979).

As to the timing of a subpoenaed party s request for reimbursement of costs of compliance, the Commission s Rules of Practice provide that a motion to quash or limit a subpoena in an adjudication "shall set forth all assertions of privilege or other factual and legal objections to the subpoena, including all appropriate argument affidavits and other supporting documentation." Rules of Practice Section 3.34(c). A request for the costs of compliance based on the burdensomeness of the subpoena should be raised at the same time the subpoenaed party files its motion to quash with the ALJ, because a request for reimbursement must be predicated upon the "factual and legal objection " that the costs of compliance with the subpoena would be unreasonable. If the ALJ finds such an objection to be merited, he should require the proponent of the subpoena to cure the unreasonable burden, either by conditioning his denial of the motion to quash upon the proponent's agreement to reimburse the recipient 5 or (absentso as to reduce compliance costs to a reasonable level such an agreement) by granting the motion to quash. Of course, compliance costs may not be fully foreseen. A subpoena recipient may undertake compliance with a subpoena on the belief , See Order Denying Motion to Reimburse Costs of Complying With Subpo na Duces Tecum . Fie No. 782,1078 August 31. l!J7J (Creditors Service Hurcau lJf EJ Paso, Inc. . See SECv Arthur Ymmlf. 51)4 Y2d lot:! (DC Cir. 1978). lW!denied. 439 U.S. 1071 (l97 j); see also United Stales Dau.phin Deposit Trust Co., :J85 F.2d l:W. l:HJ (:!d Cir. 1%7) (recipient of a summons has 11 duty of cooperalion and at least up to HOffe point must shoulder the financi al burden of cooperation) , The provision of the Operating Manual (Chap, 10, Section 1::,fi.4. R) r..lating to ALJ reimbursement orders and the proponent obligalion to tender payment. refers to this situation, in which the proponent obtains ent(m ement of its subpoena only because it agrees to reimbume the costs of compliance- Once the proponent elects to ameliorate the otherwise undue burden of it ubpoena in this way. it is bound by that election 204 FEDERAL TRADE COMMISSION DECISJONS Interlocutory 97 F. which turns out to be incorrect, that the costs will be reasonable. Therefore, the ALJ should afford the producing party the opportunity, even after compliance begins, to file a motion for a protective order conditioning further compliance upon an agreement for reimbursement of anticipated costs. The producing party may be able to show that its experience with partial compliance reveals the unreasonableness of the costs of remaining compliance. If so, the ALJ may act to relieve the undue burden in either of the ways available to him were a motion to quash fied: by conditioning further compliance upon the proponent's agreement to reimburse such compliance costs, or, if the subpoena proponent wil not agree, by terminating the obligation for further compliance. However, requests for reimbursement for compliance costs already incurred are untimely and inconsistent with the Commission s rules, because they deprive the ALJ and the proponent of the subpoena of the choice of means by which to ameliorate unreasonable burdens. Interstate did not request reimbursement in its motion to quash nor did it do so at any time during compliance. It suggests that the extent of its expenses could only be known after compliance. Brief at 4. Perhaps the exact dollar amounts could only be known after the fact, but we cannot credit the contention that Interstate was incapable of bringing to the ALJ' s attention a reasonable approximation of anticipated expenses prior to their being incurred. Accordingly, Interstate s after-the-fact request is denied as untimely. It is ordered, That Interstate s request for reimbursement be denied in light of the standards set out in this order. , -_u_- 205 Complaint