Rules of Practice for Adjudicative Proceedings, Miscellaneous Amendments

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Title 16— COMMERCIAL PRACTICES Chapter I— Federal Trade Commission SUBCHAPTER A— PROCEDURES AND RULES OF PRACTICE PART 3— RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS Miscellaneous Amendments The Commission announces the fol­ lowing amendments to Chapter I of Title 16 of the Code of Federal Regulations. These amendments are effective 15 days after publication in the F ederal R egister and will govern all proceedings initiated on or after the aforesaid effective date and the remaining procedures in all pro­ ceedings pending on the aforesaid effec­ tive date.

Subpart C— Prehearing Procedures;

Motions;

Interlocutory Appeals;

Summary Decisions Section 3.23 is amended to read as follows;

§ 3.23 Interlocutory appeals.

Rulings of the hearing examiner on motions may not be appealed to the Com­ mission prior to appeal from the initial decision except in the following circum­ stances;

(a) Appeals without a determination by the hearing examiner. The Commis­ sion may, in its discretion, entertain in­ terlocutory appeals where a ruling of the hearing examiner: (1) Requires the dis­ closure of Commission records or the ap­ pearance of an official or employee of the Commission pursuant to § 3.36; (2) re­ quires the appearance of other Govern­ ment officials pursuant to § 3.37; (3) suspends an attorney from participation in a particular proceeding pursuant to § 3.42(d); or (4) grants or denies an ap­ plication for intervention pursuant to the provisions of § 3.14. Appeal from such a ruling may be sought by filing with the Commission an application for review, not to exceed fifteen (15) pages, within five (5) days after notice of the hearing examiner’s ruling. Answer thereto may be filed within five (5) days after service of the application for review. The applica­ tion for review should specify the person or party taking the appeal; should desig­ nate the ruling or part thereof from which appeal is being taken; and should specify under which provisions hereof review is being sought. The Commission upon its own motion may enter an order staying the return date of an order issued by the hearing examiner pursuant to § 3.36 or § 3.37 or placing the matter on the Commission’s docket for review. Any order placing the matter on the Commis­ sion’s docket for review will set forth the scope of the review and the issues which will be considered and will make provi­ sion for the filing of briefs if deemed ap­ propriate by the Commission. (b) Appeals upon a determination by the hearing examiner. Except as here­ inbefore provided in paragraph (a) of this section applications for review of a ruling by the hearing examiner may be allowed only upon request made to the examiner and a determination by the ex­ aminer in writing, with justification in support thereof, that the ruling involves a controlling question of law or policy as to which there is substantial ground for difference of opinion and that an im­ mediate appeal from the ruling may ma­ terially advance the ultimate termina­ tion of the litigation or subsequent re­ view will be an inadequate remedy. Ap­ plications for review in writing may be filed, not to exceed fifteen (15) pages, within five (5) days after notice of the hearing examiner’s determination. An­ swer thereto may be filed within five (5) days after service of the application for review. The Commission may thereupon, in its discretion, permit an appeal. Com­ mission review, if permitted, will be con­ fined to the application for review and answer thereto, without oral argument or further briefs, unless otherwise or­ dered by the Commission.

(c) Proceedings not stayed. Applica­ tion for review and appeal hereunder shall not stay proceedings before the hearing examiner unless the examiner or the Commission shall so order. Subpart D— Discovery; Compulsory Process 1.

Section 3.31 is amended to read as follows:

§ 3.31 Admissions.

(a) At any time after thirty (30) days after issuance of complaint, or after pub­ lication of notice of an adjudicative hearing in a rule making proceeding un­ der § 3.13, any party may serve on any other party a written request for admis­ sion of the truth of any matters relevant to the pending proceeding set forth in the request that relate to statements or opinions of fact or of the application of law to fact, including the genuineness of any documents described in the request. Copies of documents shall be served with the request unless they have been or are otherwise furnished or are known to be, and in the request are stated as being, in the possession of the other party. Each matter of which an admission is re­ quested shall be separately set forth. A copy of the request shall be filed with the Secretary.

(b) The matter is admitted unless, within ten (10) days after service of the request, or within such shorter or longer time as the hearing examiner may allow, the party to whom the request is directed serves upon the party requesting the ad­ mission, with a copy filed with the Secre­ tary, a sworn written answer or objection addressed to the matter. If objection is made, the reasons therefor shall be stated. The answer shall specifically deny the matter or set forth in. detail the rea­ sons why the answering party cannot truthfully admit or deny the matter. A denial shall fairly meet the substance of the requested admission, and when good faith requires that a party qualify his answer or deny only a part of the matter of which an admission is re­ quested, he shall specify so much of it as is true and qualify or deny the remain­ der. An answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless he states that he has made reasonable inquiry and that the information known to, or readily obtainable by, him is insuf­ ficient to enable him to admit or deny. A party who considers that a matter of which an admission has been requested presente a genuine issue for trial may not, on that ground alone, object to the re­ quest; he may deny the matter or set forth reasons why he cannot admit or deny it.

(c) The party who has requested the admissions may move to determine the sufficiency of the answers or objections. Unless the objecting party sustains his burden of showing that the objection is justified, the hearing examiner shall order that an answer be served. If the hearing examiner determines that an answer does not comply with the re­ quirements of this rule, he may order either that the matter is admitted or that an amended answer be served. The hearing examiner may, in lieu of these orders, determine that final disposition of the request be made at a prehearing conference or at a designated time prior to trial.

(d) Any matter admitted under this rule is conclusively established unless the hearing examiner on motion permits FEDERAL REGISTER, VOL. 37, NO. 53— FRIDAY, MARCH 17, 1972

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withdrawal or amendment of the admis­ sion. The hearing examiner may permit withdrawal or amendment when the presentation of the merits of the pro­ ceeding will be subserved thereby and the party who obtained the admission fails to satisfy the hearing examiner that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits. Any admission made by a party under this rule is for the purpose of the pending proceeding only and is not an admission by him for any other purpose nor may it be used against him in any other proceeding. § 3.32 [Rescinded] 2. Section 3.32 is rescinded in its en­ tirety. This section is reserved for future use.

3. Section 3.35 is amended to read as follows:

§ 3.35 Rulings on applications for com­ pulsory process'.

Applications for orders requiring the taking of depositions pursuant to the provisions of § 3.33, and applications for the issuance of subpoenas pursuant to the provisions of §3.34 (other than as provided in §§ 3.36 and 3.37) may be made ex parte, and, if so made, such applications and rulings thereon shall remain ex parte unless otherwise ordered by the hearing examiner or the Commission. Such applications shall be ruled upon by the hearing examiner or, in the event the hearing examiner is not available, by the Director of Hearing Examiners or such other hearing ex­ aminer as the Director may designate. 4. Section 3.36 is amended to read as follows:

§ 3.36 Form of and rulings on applica­ tions for subpoenas for records of the Commission and for appearance* of Commission employees.

(a) Form. An application for issuance of a subpoena requiring the production of documents, papers, books, physical exhibits, or other material in the records of the Federal Trade Commission, or for the issuance of a subpoena requiring the appearance of an official or employee of the Commission, shall be made in the form of a written motion filed in accord­ ance with the provisions of § 3.22(a). No application for records, files, papers or information pursuant to § 4.11 of this chapter or the Freedom of Information Act may be filed with the hearing examiner.

(b) Content. The motion shall specify as exactly as possible the material to be produced, the nature- of the informa­ tion to be disclosed, or the expected testimony of the Commission official or employee, and shall contain a statement showing the general relevancy of the ma­ terial, information, or testimony, and the reasonableness of the scope of the application, together with a showing that such material, information, or testimony is not available from other sources by voluntary methods or pursuant to §§ 3.33-3.34.

(c) Rulings. Such applications (in the form of written motions) shall be ruled RULES AMD REGULATIONS upon by the hearing examiner or, in the event the hearing examiner is not avail­ able, by the Director of Hearing Exam­ iners or such other hearing examiner as the Director may designate. To the ex­ tent that the motion is granted, the hearing examiner shall provide such terms and conditions for the production of the material, the disclosure of the information, or the appearance of the Commission official or employee as may appear necessary and appropriate for the protection of the public interest. 5. Section 3.37(b) is amended to read as follows:

§ 3.37 Applications for appearance of other government officials^ * * * * * (b) Content and disposition. The mo­ tion shall contain a statement of the necessity for and the relevancy of the expected testimony or the specified ma­ terial and shall be ruled upon by the hearing examiner.

6, Section 3.38, reading as, follows, is added:

§ 3.38 Consequences of failure to com-' ply with orders.

(a) If a party or an officer or agent of a party fails to comply with an order including, but not limited to, an order for the taking of a deposition or the pro­ duction of documents, an order issued pursuant to a request for admissions, an order to comply with a subpoena, or to comply with an order of the hearing ex­ aminer or the Commission issued as, or in accordance with, a ruling upon a mo­ tion concerning such an order or subpoena or upon an appeal from such a ruling, thè hearing examiner or the Commission, or both, for the purpose of permitting resolution of relevant issues and disposition of the proceeding with­ out unnecessary delay despite such falline, may take such action in regard thereto as is just, including but not lim­ ited to the following :

(1) Infer that the admission, testi­ mony, documents or other evidence would have been adverse to the party: (2) Rule that for the purposes of the proceeding the matter or matters con­ cerning which the order or subpoena was issued be taken as established adversely to the party;

(3) Rule that the party may not in­ troduce into evidence or otherwise rely, in support of any claim or defense, upon testimony by such party, officer, or agent» or the documents or other evidence; (4) Rule that the party may not be heard to object to introduction and use of secondary evidence to show what the withheld admission, testimony, docu­ ments, or other evidence would have shown;

(5) Rule that a pleading, or part of a pleading, or a motion or other submis­ sion by the party, concerning which the order or subpoena was issued, be stricken, or that a decision of the proceeding be rendered against the party, or both. (b) Any such action may be taken by written or oral order issued in the course of the proceeding or by inclusion in an initial decision of the hearing examiner or an order or opinion of the Commis­ sion. It shall be the duty of parties to seek and hearing examiners to grant such of tiie foregoing means of relief or other appropriate relief as may be suffi­ cient to compensate for the lack of with­ held testimony, documents, or other evi­ dence. If in the hearing examiner’s opin­ ion such relief would not be sufficient, he should certify to the Commission a request that court enforcement of the subpoena or deposition be sought. Subpart E— Hearings 1. Section 3.41(b) is revised to read as follows :

§ 3.41 General rules.

ÿ * aft * * (b) Expedition. Hearings shall proceed with all reasonable expedition, and, in­ sofar as practicable, shall be held at one place and shall continue, except for brief intervals of the sort normally involved in judicial proceedings, without suspen­ sion until concluded. Consistent with the requirements of expedition, the hearing examiner may order hearings at more than one place and may grant a reason­ able recess at the end of a case-in-chief for the purpose of discovery deferred during the prehearing procedure where the examiner determines that such re­ cess will materially expedite the ultimate disposition of the proceeding. * * * * * 2. Paragraphs (c) and (d) of § 3.42 are revised to read as follows: § 3.42 Presiding officials.

* * * * * (c) Powers and duties. Hearing ex­ aminers shall have the duty to conduct fair and impartial hearings, to take all necessary action to avoid delay in the disposition of proceedings, and to main­ tain order. They shall have all powers necessary to that end, including the fol­ lowing:

(1) To administer oaths and affirma­ tions;

(2) To issue subpoenas;

(3) To take or to cause depositions to be taken;

(4) To rule upon offers of proof and receive evidence;

(5) To regulate the course of the hear­ ings and the conduct of the parties and their counsel therein;

(6) To hold conferences for settle­ ment, simplification of the issues, or any other proper purpose;

(7) To consider and rule upon, as jus­ tice may require, all procedural and other motions appropriate in an adjudicative proceeding, including motions to open defaults;

(8) To make and file initial decisions; (9) To certify questions to the Com­ mission for its determination; and (10) To take any action authorized by the rules in this part or in conform­ ance with the provisions of the Admin­ istrative Procedure Act as restated and incorporated in title 5, U.S.C. (d) Suspension of attorneys by hear­ ing examiner. The hearing examiner shall have the authority, for good cause stated on the record, to sus­ pend or bar from participation in a No. 53------3 FEDERAL REGISTER, VOL. 37, NO. 53— FRIDAY, MARCH 17, 1972

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particular proceeding any attorney who shall refuse to comply with his di­ rections, or who shall be guilty of dis­ orderly, dilatory, obstructionist, or con­ tumacious conduct, or contemptuous language in the course of such proceed­ ing. Any attorney so suspended or barred may appeal to the Commission in accord­ ance with the provisions of §3.23(a). The appeal shall not operate to suspend the hearing unless otherwise ordered by the hearing examiner or the Commis­ sion; in the event the hearing is not suspended, the attorney may continue to participate therein pending disposition of the appeal.

* * * * * Subpart G— Reports of Compliance Section 3.61(a) is revised to read as follows:

§ 3.61 Reports of compliance.

(a) In every proceeding in which the Commission has issued an order, pursu­ ant to the provisions of section 5 of the Federal Trade Commission Act or sec­ tion 11 of the Clayton Act, as amended, and except as otherwise specifically pro­ vided in any such order, each respond­ ent named in such order shall file with the Commission, within sixty (60) days after service thereof, or within such other time as may be provided by the order or the rules in this chapter, a report in writing, signed by the respondent, set­ ting forth in detail the manner and form of his compliance with the order, and shall thereafter file with the Commission such further signed, written reports of compliance as it may require. Reports of compliance shall be under oath if so re­ quested. "Where the order prohibits the use of a false advertisement of a food, drug, device, or cosmetic which may be injurious to health because of results from its use under the conditions pre­ scribed in the advertisement, or under such conditions as are customary or usual, or if the use of such advertise­ ment is with intent to defraud or mis­ lead, or where the order was issued under the Flammable Fabrics Act, or in any other case where the circumstances so warrant, the order may provide for an interim report stating whether and how respondents intend to comply to be filed within ten (10) days after service of the order. When court review of an order of the Commission is pending, the re­ spondent shall file only such reports of compliance as the court may require. Thereafter, the time for filing report of compliance shall begin to run de novo from the final judicial determination, ex­ cept that if no petition for certiorari has been filed following affirmance of the order of the Commission by a court of appeals, the compliance report shall be due the day following the date on which the time expires for the filing of such petition. The Commission will review such reports of compliance and may ad­ vise each respondent whether the actions set forth therein evidence compliance with the Commission’s order. The Com­ mission may, however, institute pro­ ceedings, including certification of facts RULES AND REGULATIONS;

to the Attorney General pursuant to the provisions of section 5(1) of the Federal Trade Commission Act (15 U.S.C. 45(1) ) and section 11(1) of the Clayton Act, as amended (15 U.S.C. 21(D ), to enforce compliance with an order, without advis­ ing a respondent whether the actions set forth in a report of compliance evidence compliance with the Commission’s order or without prior notice of any kind to a respondent.

* *.

* * * (Sec. 6, 38 Stat. 721; 15 U.S.C. 46) By direction of the Commission dated March 13,1972.

[ seal] Charles A. T o b in, Secretary.

[FR Doc.72-4076 Filed 3-16-72;8:46 am]