[Federal Register Volume 61, Number 188 (Thursday, September 26, 1996)]
[Rules and Regulations]
[Pages 50640-50651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24316]
[[Page 50639]]
_______________________________________________________________________
Part VI
Federal Trade Commission
_______________________________________________________________________
16 CFR Part 2, et al.
Rules of Practice Amendments; Final Rule
Federal Register / Vol. 61, No. 188 / Thursday, September 26, 1996 /
Rules and Regulations
[[Page 50640]]
FEDERAL TRADE COMMISSION
16 CFR Parts 2, 3, and 4
Rules of Practice Amendments
AGENCY: Federal Trade Commission (FTC).
ACTION: Interim rules with request for comments.
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SUMMARY: The FTC is amending its Rules of Practice for adjudicatory
proceedings. The amendments are expected to reduce the cost,
complexity, and length of FTC adjudicatory proceedings by clarifying
and streamlining the agency procedures governing such proceedings.
DATES: These rule amendments are effective on September 26, 1996.
Comments must be received on or before November 25, 1996. Dates of
Applicability: These amendments will govern all Commission adjudicatory
proceedings that are commenced on or after January 1, 1997. They will
also govern all Commission adjudicatory proceedings that are currently
pending and all proceedings that are commenced before January 1, 1997,
except to the extent that, in the opinion of the Administrative Law
Judge (ALJ) or the Commission, the application of one or more amended
rules in a particular proceeding would not be feasible or would work
injustice.
ADDRESSES: Written comments must be submitted in 20 copies to the
Office of the Secretary, Room 159, Federal Trade Commission, 6th Street
& Pennsylvania Avenue, N.W., Washington, D.C. 20580. Individuals filing
comments need not submit multiple copies.
FOR FURTHER INFORMATION CONTACT: Cynthia Hogue Levy, (202) 326-2158,
Jonathan Luna, (202) 326-2444, or Alex Tang, (202) 326-2447, Attorneys,
Office of General Counsel, FTC, Sixth Street & Pennsylvania Avenue,
N.W., Washington, D.C. 20580.
SUPPLEMENTARY INFORMATION: On May 30, 1995, FTC Chairman Robert
Pitofsky announced the formation of a special Task Force on
Administrative Adjudication (``Task Force'') to review FTC rules and
policies governing the conduct of administrative litigation at the
Commission (``Part 3 Rules''). The Task Force developed recommendations
for clarifying and streamlining current procedures for adjudication
before the Commission.
As the Commission has previously recognized, unnecessary delay in
adjudications can have a negative impact on the Commission's
adjudicatory program and law enforcement mission. The agency's
longstanding policy has been that, to the extent practicable and
consistent with requirements of law, adjudicative proceedings shall be
conducted expeditiously and that both the Administrative Law Judge and
litigants shall make every effort to avoid delay at each stage of a
proceeding. 16 CFR 3.1. Unnecessarily long proceedings waste Commission
and private resources. Delay can extend legal uncertainty for
respondents and third parties, and may reduce the efficacy of any
remedies resulting from such proceedings. Delay may also lessen the
quality of agency decisions when evidence becomes stale. The risk of
lengthy proceedings may also undermine administrative adjudication as a
valid alternative when parties are deciding whether to settle a matter.
While some respondents may benefit, others may feel unduly pressured to
settle if they believe that Part 3 litigation will entail a substantial
commitment of time and resources. Similarly, the expectation of
unnecessarily lengthy administrative litigation may lead Commission
staff to recommend Commission acceptance of an unduly limited
settlement. The length of time taken in FTC proceedings may also be a
factor that some courts consider in deciding whether to grant a
preliminary injunction pending the outcome of the Commission's
administrative proceeding. FTC v. Freeman Hosp., 1995-1, Trade Cas.
(CCH) para. 71,037 at 74,893 n.8 (D. Mo. 1995), aff'd, 69 F. 3d 260
(8th Cir. 1995).
In light of such concerns, the Commission has made several efforts
over the years to identify ways to make Part 3 proceedings more
efficient without sacrificing the quality of decisionmaking or
compromising the procedural rights of parties in such proceedings. In
1985, for example, the Commission adopted various rule changes
specifically designed to improve prehearing case management and
expedite Part 3 proceedings, including the existing requirement
regarding the timely initiation of evidentiary hearings. 50 FR 41485
(Oct. 11, 1985).
More recently, the Commission has made further strides to reduce
the time taken to render decisions in adjudicative proceedings.\1\ In
April 1994, the Commission set internal deadlines for the preparation
and issuance of final orders and opinions in appeals from an initial
decision. This schedule established deadlines for each of the principal
stages of preparation of adjudicative opinions, including separate
statements. Under the new schedule it is expected that the drafting
process is the usual adjudicative proceeding should generally span
approximately eight (8) months (following oral argument before the
Commission). To ensure that its adjudicative decisionmaking remains on
schedule, the Commission meets quarterly, or more often when necessary,
to review the progress of each pending adjudicative matter on appeal
before the Commission.
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\1\ In announcing institutional improvements at the agency,
then-Chairman Steiger explained that the Commission had determined
to take action to address criticisms of delay that were contained in
a Task Force Report of the American Bar Association. See Prepared
Remarks of Chairman Janet D. Steiger Before Section of Antitrust
Law, American Bar Association (Apr. 8, 1994) (referring to Report of
the American Bar Association Section of Antitrust Law Special
Committee to Study the Role of the Federal Trade Commission, 58
ANTITRUST L.J. 43 (1989)).
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Since implementing a deadline schedule governing its own conduct in
the preparation of final orders and opinions in adjudicative
proceedings, the Commission has disposed of a backlog of cases pending
when the schedule was adopted. Currently, there is one adjudicative
proceeding pending before the Commission on appeal.
Building upon these past actions, the Commission has determined to
adopt further procedural rule changes as set forth below. The
Commission believes that these changes will advance its goal of
assuring the public that administrative law enforcement proceedings
will be resolved fairly and within a reasonable time.
The Commission also encourages the ALJs to consider implementing
other techniques, besides the rule amendments announced in this notice,
to expedite action in each adjudicatory proceeding. Efficient
adjudication required affirmative case management, and ALJs have broad
powers under Rule 3.42(c) that should be used fully to balance the
interests in expedition and fairness.
Two techniques for expediting evidentiary hearings particularly
merit attention by the ALJs. First, the Commission encourages the ALJs
generally to conduct the evidentiary hearing by using consecutive, full
trial days. Historical data for the past ten years indicate that while
the average evidentiary trial spans over three (3) months, only thirty
of those days are actual trial days. Normally conducting proceedings on
consecutive days, in most cases, would enable the ALJ and the litigants
to use the period designated for trial to its fullest advantage.
[[Page 50641]]
Second, in appropriate cases the ALJs should encourage the parties
to submit the direct examination of expert witnesses in writing, in
lieu of live direct examination, reserving live testimony for the
cross-examination. This practice would reduce the time necessary for
the presentation of direct testimony but still allow the ALJ to assess
the demeanor and credibility of expert witnesses. Submission of direct
expert testimony in writing may result in more focused cross-
examination and would afford both the parties and the ALJ an
opportunity to identify in advance any questions raised by the expert's
direct testimony.
The Commission also invites the ALJs to exercise their discretion
in regulating the course of adjudicative proceedings in a manner that
expedites proceedings, consistent with due process considerations. For
instance, ALJs may wish to consider requiring that, in appropriate
circumstances, proposed findings of fact and conclusions of law be
submitted by the parties before, rather than after, trial. In certain
proceedings, this practice could instill more rigor in the litigants'
presentation of evidence at trial, while also aiding the ALJ in
monitoring the introduction of evidence and in preparing findings of
fact and conclusions of law after the evidentiary hearing. ALJs may
wish to utilize an alternative procedure, either in conjunction with,
or in lieu of, pretrial findings of fact and conclusions of law. For
example, an ALJ may require the parties to submit proposed stipulations
and contentions to further narrow the legal and factual issues to be
presented during the evidentiary hearing. See e.g., United States v.
American Telephone & Telegraph Co., 552 F. Supp. 131, 140 (D.D.C.
1982).
As a further step in expediting administrative adjudication, the
Commission has determined to establish an alternative ``fast track''
schedule that respondents may elect in appropriate administrative
proceedings.\2\ The option is available when a federal district court
has granted a preliminary injunction in a collateral federal court
proceeding, brought by the Commission to challenge some or all of the
same conduct at issue in the administrative proceeding.\3\ Under the
fast track schedule, the Commission would issue a final order and
opinion within thirteen (13) months after the latest of the following
events (``triggering event''): (1) Issuance of an administrative
complaint; (2) entry of a preliminary injunction by a federal district
court; or (3) the date on which respondent elects the fast track. This
deadline may be amended by the Commission only in the following two
circumstances: (1) If the Commission's final order or opinion contains
material or information designated for in camera treatment, thus
obliging the agency to provide advance notification of the Commission's
intent to disclose that information to submitters of such in camera
material or information; or (2) if the Commission determines that
adherence to the thirteen-month deadline would result in a miscarriage
of justice due to circumstances unforeseen at the time of respondent's
election of the fast track proceeding.
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\2\ The new procedure could apply to any administrative
adjudication specifically designated by the Commission in which the
agency also seeks a preliminary injunction to enjoin the same
conduct challenged in the administrative complaint. The Commission
expects that most such cases will involve challenges to mergers and
acquisitions.
\3\ If the preliminary injunction is later vacated, the
Commission, in its discretion, may take such action as it deems
appropriate in the administrative adjudication.
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When the Commission determines to authorize its staff to seek a
preliminary injunction in federal court, the agency may also determine
to advise the respondent that the respondent may elect the fast track
schedule if the federal district court preliminarily enjoins the
challenged conduct. Such notice will be provided to the prospective
respondent at the time it is notified of the Commission's action
authorizing the preliminary injunction motion. The Commission expects
that the fast track procedure will be available to respondents in the
typical merger challenge; however, certain cases may appear too complex
at the outset to be designated as appropriate for the fast track
schedule. In such instances, the Commission would not notify the
respondent respecting an option to elect the fast track.
The new rule specifies the period of time within which a potential
respondent must elect the fast track schedule. In administrative
proceedings involving multiple respondents, the fast track schedule
will be available only if all respondents elect it.
The Commission expects that the expedited deadlines imposed under
the fast track procedures will require active management by the ALJ.
Although the new fast track rule specifies certain interim deadlines,
the time frames for other interim stages are left to the ALJ's
discretion. Thus, the length of time to be allotted for discovery, the
evidentiary hearing, and post-trial written submissions are to be set
by the ALJ, in keeping with the fast track requirement that the ALJ
must file the initial decision within one hundred ninety-five (195)
days after the triggering event specified in new Sec. 3.11A. The
Commission anticipates that in a typical proceeding governed by the
fast track schedule, discovery will be completed within three (3)
months, the evidentiary hearing will span no longer than six weeks, and
post-trial submissions will be submitted within four weeks following
the conclusion of the evidentiary hearing.
The ALJ may in his discretion treat discovery from the preliminary
injunction hearing and transcripts of testimony in the preliminary
injunction proceeding as if the material had been discovered and
presented in the administrative proceeding. The ALJ may limit the
number of depositions, witnesses, or document production under his
plenary authority. See 16 CFR 3.42(c)(6).
The fast track appellate procedure before the Commission differs
from that governing the standard administrative adjudication. In
addition to the shorter time frame required for issuance of the
Commission's final order and opinion, the fast track procedure requires
the simultaneous filing of the parties' initial appeal briefs (rather
than the staggered cross-appeal procedure permitted under Rule
3.52(c)). The Commission's final order and opinion in the proceeding
will be ready for issuance within one hundred ninety-five (195) days
after the filing of the ALJ's initial decision.\4\
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\4\ The Commission's final order and opinion will be ready for
issuance within the specified time period, except that, if the
Commission's order or opinion contains material or information that
has been designated for in camera treatment, its issuance may be
delayed to the extent necessary to provide the submitters of such
material or information with advance notice of the Commission's
intent to release such information in the final order or opinion in
the proceeding.
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The thirteen (13) month deadline contemplated under the new
procedural rule compares favorably with the schedules followed by
federal district courts in a number of permanent injunction hearings
involving mergers. Since 1986, the Department of Justice Antitrust
Division has litigated eight merger enforcement actions on the merits
in permanent injunction proceedings in federal court.\5\ On average,
these cases spanned approximately ten (10) months from filing of the
complaint to issuance of the district court opinion.See generally
United States v. Mercy Health Services, 902 F. Supp. 968 (N.D. Iowa
1995)--complaint to opinion: 141 days (including ten-day trial); United
States v. Nat. L.C., and D.R. Partners D/B/A Donrey Media Group, 892 F.
Supp 1146 (W.D. Ark. 1995)--complaint to
[[Page 50642]]
opinion: ninety-four days (including eight-day trial); United States v.
United Tote, Inc., 768 F. Supp. 1064 (D. Del. 1991)--complaint to
opinion: 422 days [1.2 years] (including six-day trial); United States
v. Baker Hughes, Inc., 731 F. Supp. 3 (D.D.C. 1990)--complaint to
opinion: seventy days (including one-day trial); United States v. The
Rank Organisation plc, 1990-2 Trade Cas. (CCH) para.69,257 (C.D. Cal.
1990)--complaint to opinion: 141 days (including eight-day trial);
United States v. Rockford Memorial Corp., 717 F. Supp. 1251 (N.D. Ill.
1989)--complaint to opinion: 267 days (including nineteen-day trial);
United States v. Syufy Enterprises, 712 F. Supp. 1386 (N.D. Cal 1989)--
complaint to opinion: 973 days (2.6 years) (including eight-day trial);
and United States v. Carilion Health System, 707 F. Supp. 840 (W.D. Va.
1989)--complaint to opinion: 262 days (including twenty-six day trial).
The Commission's new procedures entail a slightly longer period of time
than the instances cited, because they contemplate both a trial and an
administrative appellate process. Because an initial decision by an ALJ
is followed by de novo review of the initial decision by the
Commission, the longer time frame is necessary. The Commission believes
this expedited time frame is both realistic and a reasonable period
within which such adjudications should be resolved.
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\5\ Some of these cases involved a consolidation of both the
preliminary and permanent injunction proceedings.
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In addition to the rule amendments announced today, the Commission
has determined to implement the following two institutional
improvements that are intended to make information more readily
available to the public regarding both the agency's case management of
its adjudicative docket and interlocutory rulings issued by ALJs in
adjudicative proceedings. Neither procedure requires amendment to the
agency's Rules of Practice. First, the Commission has directed that a
quarterly status report reflecting the progress of pending
adjudications before ALJs be made publicly available. Such reports
would include, inter alia, the dates on which milestone events in a
particular proceeding occurred (e.g., filing of the administrative
complaint, respondent's answer, scheduling conference before the ALJ,
issuance of the ALJ's scheduling order, close of discovery, final
pretrial conference, commencement and conclusion of the evidentiary
hearing, and filing of the ALJ's initial decision). The Commission has
concluded that disclosure of information about the agency's
adjudication program caseload would increase awareness of the
importance of the program and promote public confidence in its
efficiency and fairness. Similar status reports are prepared to
describe the status of cases pending in federal district courts, in
keeping with the provisions of the Civil Justice Reform Act of 1990. 28
U.S.C. 476 (requiring semiannual reporting of, inter alia, bench trials
and motions that have been submitted for more than six (6) months and
the number of cases that have not been terminated within three years
after filing).
Second, the Commission has determined to make ALJ interlocutory
orders in adjudicative proceedings more readily available to the
public. Currently, some, but not all, ALJ interlocutory orders are
widely available to the public through legal research resources. Recent
technological advances will soon enable the agency to make significant
ALJ interlocutory orders available to the public through electronic
means via the Internet. Accordingly, the Commission has committed
itself to making such interlocutory orders available to the public
through such means during the next fiscal year.
The specific rule amendments that the Commission is adopting at
this time are as follows:
A. Imposing Tighter Deadlines
1. Rule 3.12(a) is being amended to shorten the dead-line for the
filing of an answer after service of the administrative complaint. The
rule currently allows thirty (30) days for the filing of the answer.
The revised rule shortens this period to twenty (20) days, in
conformity with the Federal Rules of Civil Procedure (``Federal
Rules''). See Fed. R. Civ. P. 12(a)(1)(A). The Commission believes
twenty (20) days should be adequate, since the Commission sees no
reason why an FTC complaint should take any longer to answer than does
a federal court complaint.
2. Rule 3.21 is being amended to require that the scheduling
conference be held within seven (7) calendar days after filing of the
answer, and that the scheduling order be issued by the ALJ within two
(2) days thereafter. Since respondents in agency adjudications have
already been on notice of the Commission's investigation, a week should
be sufficient time for the parties to prepare for the preliminary
matters to be discussed at the scheduling conference (e.g., general
discovery plan, timetable for the proceeding). Similarly, no more than
two (2) days, rather than the two (2) weeks currently allowed by the
current rule, should be necessary for an ALJ to prepare and issue a
scheduling order once the scheduling conference has concluded.
3. Rule 3.51(a) is being amended to require explicitly that the ALJ
file an initial decision within one (1) year of service of the
administrative complaint. The ALJ is being permitted, however, in
extraordinary circumstances to extend this deadline by up to a two-
month period, which may be extended upon expiration of that period by
additional, consecutive periods of up to two (2) months, provided that
for each such extension the ALJ finds that extraordinary circumstances
continue to be present. The rule continues to require, however, that
the ALJ issue an initial decision within ninety (90) days after the
hearing record closes, or thirty (30) days after a default or the
granting of a motion for summary decision or waiver by the parties of
the filing of proposed findings of fact, conclusions of law, and order.
Experience suggests that interim deadlines have not been completely
successful in promoting the expeditious resolution of Part III cases.
In the Commission's view, a one-year deadline for the initial decision
is a realistic time frame for most adjudicative proceedings and would
encourage ALJs to exercise more active control in managing cases from
start to finish. The pendency of any collateral federal court
proceeding that relates to the administrative adjudication will toll
the one-year deadline for filing the initial decision. The
administrative proceeding may be stayed until resolution of the
collateral federal court proceeding.
4. Rules 3.21 and 3.22(d) are being amended to (a) clarify the
standard for obtaining extensions of deadlines established in the
scheduling order, and (b) prohibit the ALJ from ruling on ex parte
motions to extend such deadlines. Currently, such modifications are
permitted only under a ``good cause'' standard. The rule is being
amended to provide further guidance on this standard. Specifically, all
motions to extend any deadline or time specified in the scheduling
order are required to set forth the total period of extensions
previously obtained by the moving party. In making a determination on
such motions, ALJs will consider any extensions already granted, the
length of the proceedings to date, and the need to conclude the
evidentiary hearing and render an initial decision in a timely manner.
Currently, Rule 3.22(d) permits the ALJ to rule on ex parte motions for
extensions of time. Such rulings would no longer be permitted on the
basis of ex parte motions under the amendments to Rules 3.21 and
3.22(d), as set forth below.
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B. Minimizing Discovery Delays
1. Rule 3.21 is being revised to promote greater use of prehearing
and status conferences where such conferences are not otherwise
explicitly required by the Commission's rules. The Commission believes
that such conferences facilitate the overall adjudicatory process by
focusing the parties on the issues that are material to the case,
promoting the exchange of relevant information, forestalling
unnecessary and time-consuming motions, and providing a forum for
resolving discovery disputes and exploring settlement options.
2. Rule 3.21 is being amended to require that the counsel for the
parties conduct a meeting (preferably, in person) with one another
before the scheduling conference and also before their final prehearing
conference with the ALJ. (The final prehearing conference is also a new
requirement, as discussed infra.) The meeting before the scheduling
conference is intended to provide the parties with an opportunity to
discuss the possibility of settlement and to decide, if possible, on a
proposed discovery schedule, the handling of pretrial motions, a
preliminary estimate of the time required for the hearing, and a
hearing date. This requirement is modeled upon Fed. R. Civ. P. 26(f),
which requires that the parties meet before the scheduling conference
and order. The meeting before the final prehearing conference is
intended for the parties to discuss potential stipulations of law and
fact, the admissibility of or objections to evidence, and the
organization and exchange of exhibits, witness lists, and designated
deposition testimony. This meeting should narrow the issues to be
addressed at the final prehearing conference and help the ALJ plan an
efficient evidentiary hearing.
3. Current Rule 3.21(a) is being deleted to abolish the requirement
that the parties each file a nonbinding statement before the scheduling
conference, stating the anticipated issues, theories, and proof of the
case. The requirement that parties provide a preliminary assessment of
their case theories has not, in practice, demonstrably fulfilled its
originally intended purpose in helping the ALJ manage cases and control
discovery. 50 FR 41485, 41487 (Oct. 11, 1985). Although nonbinding
statements are no longer being required by rule, ALJs will continue to
retain their discretion, under the plenary power set forth in Rule
3.42(c), to order that the parties file such statements if they would
be useful in a particular case.
4. Rule 3.31 is being revised, after redesignating certain
paragraphs, to add a new paragraph (b) requiring that the parties make
certain initial disclosures within five (5) days after the answer,
without waiting for a formal discovery request. These disclosures would
be similar to the initial disclosures required by Fed. R. Civ. P.
26(a)(1) in federal court litigation. In particular, parties will be
required to exchange the names, addresses, and telephone numbers of
individuals likely to have discoverable information. The parties will
also be required to exchange a copy, or a description by category and
location, of all documents, data, and other tangible things in
possession of the party that are relevant to disputed facts alleged in
the pleadings. These initial disclosures are intended to expedite
discovery by reducing the need for parties to request basic documents
and other information.
5. Rules 3.31, 3.33, 3.34, 3.35, 3.36, 3.37, and other Part III
provisions are being revised to eliminate in substantial part the
requirement that ALJs pre-authorize requests and subpoenas for
depositions, interrogatories, documents, and access for inspection and
other purposes before a party may serve such a request or subpoena. The
elimination of ALJ pre-authorization includes discovery requests for
access to documents in the possession, custody, or control of the
Federal Trade Commission or its employees or for subpoenas requesting
the appearance of an official or employee of the Commission. Since Rule
3.31 already provides that parties may seek a protective order from a
discovery or access request, and Rule 3.34 provides for motions to
quash a subpoena, pre-authorization of discovery requests and subpoenas
appears to be unnecessary to prevent abuse. See also 16 CFR 3.38A
(withholding requested material). This revision is not intended to
diminish the ALJ's authority to enlarge or limit the scope of
discovery. See, e.g., Maremont Corp., 76 F.T.C. 1061, 1062, (1969)
(discovery is primarily the responsibility of the ALJ and the
Commission ``ordinarily will not dispute his rulings thereon''). The
Commission notes that the Federal Rules of Civil Procedure do not
require parties to obtain such authorization before they may make a
discovery request. See, e.g., Fed. R. Civ. P. 30(a)(1) (taking
testimony by deposition without leave of court). The Commission's rules
will continue to require, however, that parties submit a written motion
to the ALJ for subpoenas seeking the discovery of documents of other
government agencies, or the appearance of employees of such
agencies.\6\ See 16 CFR 3.36. Likewise, parties must continue to seek
the prior approval of the ALJ to compel the attendance of a person to
testify at an adjudicative hearing. See 16 CFR 3.34(a).
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\6\ The amended Rule 3.36 will continue to require that motions
for discovery from other government agencies make a specific showing
that the information or material sought cannot reasonably be
obtained by other means. By eliminating ALJ pre-approval of
discovery from the Commission, the amended rule eliminates the
requirement that this showing be made for subpoenas for records of
the Commission or for the appearance of Commission employees.
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6. Rule 3.31(b)(1) is being amended and redesignated as 3.31(c)(1)
to strengthen the ALJs' authority to prevent abusive discovery tactics
by limiting the frequency or extent of discovery under certain
conditions (e.g., when it would be cumulative or duplicative). This
amendment tracks in relevant part the language of Fed. R. Civ. P.
26(b)(2), which sets forth similar limitations on discovery.
7. Rule 3.31(a) is being amended to encourage simultaneous
discovery by requiring its use whenever practicable. While the current
rule does not preclude simultaneous discovery, it is practiced only
sporadically in adjudicative proceedings. The Commission believes that
simultaneous discovery prevents an unprepared party from hindering the
overall progress of the case, while it allows a prepared party to move
forward expeditiously.
8. Rule 3.31 is also being amended to redesignate existing
paragraphs to allow for the addition of a new paragraph (e), explicitly
requiring that a party supplement its response to a discovery request
when circumstances render the party's previous response incomplete or
incorrect. This requirement, which is modeled, in part, on similar
requirements in Fed. R. Civ. P. 26(e), is intended to promote greater
candor and cooperation among parties by placing an affirmative burden
on each party to ensure that its original response remains accurate and
complete. Failure to observe this requirement may result in sanctions
or an order to comply issued by the ALJ under Rule 3.38.
9. The definition of the term ``documents'' in Rule 3.34(b) is
being amended to incorporate technological advances in electronic
communications and digital information storage.
10. Rule 3.35(a)(1) is being amended to limit each party to twenty-
five (25) interrogatories, consistent with federal court practice. See
Fed. R. Civ. P. 33. Limiting the number of interrogatories is intended
to improve the efficiency of interrogatory practice and prevent the
[[Page 50644]]
overuse of interrogatories as a means of harassing another party or
delaying discovery.
11. Rule 3.35(a)(2) is being amended to establish a uniform thirty-
day period for parties to respond to interrogatories. Under the current
rule, a respondent may take up to forty-five (45) days to respond from
the date that the administrative complaint is served on that
respondent, while other parties must respond within thirty (30) days
from the date that the interrogatory is served. The amendment would
eliminate the 45-day rule for respondents, which appears to have caused
some confusion among practitioners. The amendment would also bring the
Commission's rules in line with federal court practice, which requires
that all parties, including the defendant, in a civil action respond
within thirty (30) days of being served with an interrogatory. See Fed.
R. Civ. P. 33(b)(3).
C. Minimizing Delay at Trial
1. Rule 3.21 is being amended to require that the ALJ hold a final
prehearing conference as close to the commencement of trail as
reasonably practicable. See Fed. R. Civ. P. 16(d). At this conference,
counsel will be required to submit any proposed stipulations of law,
fact, or admissibility of evidence, exchange exhibit and witness lists,
and designate testimony to be presented by deposition. The ALJ will
also be required to resolve any outstanding evidentiary matters or
pending motions (except motions for summary decision), and to establish
a final schedule for the evidentiary hearing. In requiring that
``counsel'' personally attend this conference, the Commission intends
that at least one attorney for each party (preferably the attorney
responsible for trying the case) appear; if not represented by an
attorney, the party shall attend on the party's own behalf.
Furthermore, as discussed earlier, counsel for the parties will be
expected to consult with one another on these matters in a meeting
(preferably, in person) prior to the final conference.
2. Rule 3.43(b) is being amended to incorporate relevant language
in Rules 403 and 611 of the Federal Rules of Evidence regarding the
exclusion of cumulative evidence. The amended rule is intended to make
clearer to litigants that the ALJ is empowered to exclude unduly
repetitious, cumulative, and marginally relevant materials that merely
burden the record and delay the trial. This clarification is intended
to enhance the ALJ's ability to assemble a concise and manageable
record.
3. Rule 3.21 is being amended to require that the ALJ's scheduling
orders include specific instructions on how the parties shall mark
their exhibits. Such guidance is currently contained only in the FTC
Operating Manual, which is primarily used for staff guidance. Requiring
that such specific instructions be included in the scheduling order is
intended to make them more directly available to the parties.
D. Filing of Documents and Motions
1. Rule 3.22(a) is being amended to specify that copies of motions
filed with the Secretary must also be provided promptly and directly to
the ALJ. This amendment is intended to codify a practice that is well-
established in many federal courts and that many FTC practitioners
already appear to follow.
2. Rule 3.22(b) is being amended to require that all motions in
adjudicative proceedings include the name, address, and telephone
number of counsel, and attach a draft order containing the proposed
relief. A conforming change is also being made to Rule 4.2, regarding
filing requirements. The requirement that motions provide contact
information and a draft order is intended to facilitate the
administrative processing and disposition of motions, and is consistent
with federal court practice. See, e.g., Fed. R. Civ. P. 7(b)(1) &
11(a).
3. Rule 3.25(b), governing motions to settle and withdraw a matter
from adjudication, is being amended to underscore the requirement that
such motions, like all motions in adjudicatory proceedings, be filed
with the Office of the Secretary, pursuant to Commission Rule 4.2(a).
One ALJ has observed that counsel sometimes submit their Rule 3.25(b)
motions directly to him without filing them with the Secretary as
required. The amendment complements existing Rule 3.25(c), under which
the withdrawal of a matter from adjudication is not triggered until the
Secretary receives the appropriate motion.
4. Rule 3.24(a)(1) is being amended to require that a party moving
for summary decision include a statement of the material facts as to
which the party contends there is no genuine issue. The Commission
notes that several local rules of federal courts require such
statements. See, e.g., D.D.C. Local Rule 108(h); S.D.N.Y. Local Rule
8(d); C.D. Cal. Local Rule 7.14; S.D. Fla. Local Rule 7.5. Changes are
also being made in paragraphs (a)(2) and (a)(3) to make more explicit
the existing requirement in paragraph (a)(3) that the opposing party
provide a statement setting forth specific facts showing that there
remains a genuine issue to be tried. See Fed. R. Civ. P. 56(e).
Requiring that the moving and opposing parties provide statements is
designed to expedite ALJ review of and rulings on summary decision
motions.
5. Rule 3.24(a)(1) is also being amended to permit complaint
counsel to move for summary decision in twenty (20), rather than thirty
(30), days after the complaint is issued, as specified under the
current rule. The change mirrors the proposed amendment to Rule
3.12(a), reducing the time to file an answer to the complaint from
thirty (30) to twenty (20) days, as discussed earlier.
6. Rule 3.22(d) is being revised to remove the ALJ's discretion to
rule on ex parte requests for extensions of time. This change is also
reflected in revised Rule 3.21, regarding modification of scheduling
orders.
E. Miscellaneous
1. Rule 3.11A is being added to establish an alternative ``fast
track'' schedule that respondents in certain administrative proceedings
may elect if a federal district court has granted a preliminary
injunction in a collateral federal court proceeding brought by the
Commission. Under the fast track schedule, the Commission shall, with
limited exception, be prepared to issue a final order and opinion in
such expedited proceedings within thirteen (13) months after the
triggering event.
2. Rule 3.44 is being amended to add new paragraph (c), requiring
that ALJs formally close the hearing record immediately upon the close
of the evidentiary hearing. A conforming change is also being made to
Rules 3.46(a) 3.51(a). The Commission believes that little, if any,
useful purpose is served by allowing the record to remain open after
completion of the trial, and believes that it may contribute to
adjudicatory delay. In requiring that ALJs close the record promptly at
the end of the trial, the Commission does not intend, however, to alter
or interfere with the procedures under paragraph (b) of the existing
rule for post-trial corrections to the record as may be necessary, even
after it has closed.
3. Rules 2.8, 2.9, and 2.15 are being revised to terminate the
currently prescribed use of ``presiding officials'' in investigational
hearings. This practice is neither required by law nor necessary for
the protection of witness' rights. By eliminating the use of presiding
officials, the Commission seeks to avoid the erroneous perception that
investigational hearings are conducted by persons with the same degree
of authority and independence
[[Page 50645]]
that ALJs have in adjudicative proceedings.
4. Rule 3.55 is being amended to shorten the time period for filing
a petition for reconsideration. The current rule allows a party to file
such a petition within twenty (20) days after service of the
Commission's decision. By comparison, Federal Rule of Appellate
Procedure 40 allows only fourteen (14) days, and the Commission
believes that this time period should also be adequate for parties to
file for reconsideration in a Commission adjudication.
5. Rules 3.22(a) and 3.51 are being amended to delete language
describing the procedure for filing documents containing in camera
material and to substitute cross-references to Rule 3.45, which is also
being amended to set forth the relevant in camera procedures and
obligations in their entirety. These revisions are expected to reduce
the confusion that may arise from duplicative instructions and to
improve the litigants' understanding and observance of in camera
procedures.
These rule revisions relate solely to agency practice and, thus,
are not subject to the notice and comment requirements of the
Administrative Procedure Act, 5 U.S.C. 553(a)(2), nor to the
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2). The
Paperwork Reduction Act does not apply to these requirements. 44 U.S.C.
3518(c)(ii). Although the rule revisions are effective as stated in the
previous section, the Commission welcomes comment on them and will
consider further revision, as appropriate.
List of Subjects
16 CFR Part 2
Administrative practice and procedure, Investigations, Reporting
and recordkeeping requirements.
16 CFR Part 3
Administrative practice and procedure, Claims, Equal access to
justice, Lawyers.
16 CFR Part 4
Administrative practice and procedure, Freedom of Information Act,
Privacy Act, Sunshine Act.
For the reasons set forth in the preamble, the Federal Trade
Commission amends Title 16, Chapter I, Subchapter A of the Code of
Federal Regulations, as follows:
PART 2--NONADJUDICATIVE PROCEDURES
1. The authority for part 2 continues to read as follows:
Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46.
2. Section 2.8 is amended by revising the first sentence of
paragraph (b) to read as follows:
Sec. 2.8 Investigational hearings.
* * * * *
(b) Investigational hearings shall be conducted by any Commission
member, examiner, attorney, investigator, or other person duly
designated under the FTC Act, for the purpose of hearing the testimony
of witnesses and receiving documents and other data relating to any
subject under investigation. * * *
* * * * *
3. Section 2.9 is amended by revising the last sentence of
paragraph (b)(4), all of paragraph (b)(5), and the first and second
sentences of paragraph (b)(6) to read as follows:
Sec. 2.9 Rights of witnesses in investigations.
* * * * *
(b) * * *
(4) * * * Copies of such petitions may be filed as part of the
record of the investigation with the person conducting the
investigational hearing, but no arguments in support thereof will be
allowed at the hearing.
(5) Following completion of the examination of a witness, counsel
for the witness may on the record request the person conducting the
investigational hearing to permit the witness of clarify any of his or
her answers. The grant or denial of such request shall be within the
sole discretion of the person conducting the hearing.
(6) The person conducting the hearing shall take all necessary
action to regulate the course of the hearing to avoid delay and to
prevent or restrain disorderly, dilatory, obstructionist, or
contumacious conduct, or contemptuous language. Such person shall, for
reasons stated on the record, immediately report to the Commission any
instances where an attorney has allegedly refused to comply with his or
her directions, or has allegedly engaged in disorderly, dilatory,
obstructionist, or contumacious conduct, or contemptuous language in
the course of the hearing. * * *
4. Section 2.15 is amended by revising the last sentence of
paragraph (b) to read:
Sec. 2.15 Orders requiring witnesses to testify or provide other
information and granting immunity.
* * * * *
(b) * * * The appeal shall not operate to suspend the hearing
unless otherwise determined by the person conducting the hearing or
ordered by the Commission.
PART 3--RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS
5. The authority for part 3 continues to read as follows:
Authority: Sec. 6, 38 Stat. 721 (15 U.S.C. 46), unless otherwise
noted.
6. Section 3.11A is added to read as follows:
Sec. 3.11A Fast Track Proceedings.
(a) Availability of Fast Track Proceedings. In certain
administrative proceedings that have been designated by the Commission
as appropriate for the fast track schedule, respondents may elect to
have the proceeding adjudicated under the expedited schedule set forth
in this section. In administrative proceedings involving multiple
respondents, the fast track schedule shall be available only if all
respondents elect it. The Commission shall designate whether the fast
track schedule will be available at the time it authorizes Commission
staff to seek a preliminary injunction in federal district court and
shall provide notice of the defendant's option to elect the fast track
procedures in the event that the Commission should initiate an
administrative adjudication challenging some or all of the same conduct
at issue in the federal court injunctive proceeding. Such notice shall
be provided to the prospective respondent at the time it is notified of
the Commission's action to authorize the filing of the preliminary
injunction motion. In fast track proceedings, the Commission shall be
prepared to issue a final order and opinion within thirteen (13) months
after the latest of the following events (hereinafter ``triggering
event''): Issuance of the Commission's administrative complaint; entry
of a preliminary injunction by a federal court in a collateral
proceeding against respondent brought by the Commission; or the date on
which respondent elects the fast track procedure. The date for issuance
of the Commission's final order and opinion in fast track proceedings
may be amended by the Commission in the following circumstances: If the
Commission's final order or opinion contains material or information
designated for in camera treatment such that the agency is required to
provide advance notification of such disclosure to submitters of in
camera material or information; or if the Commission determines that
adherence to the thirteen-month deadline would result in a miscarriage
of justice due to circumstances unforeseen at the time of respondent's
election of the fast track
[[Page 50646]]
proceeding. Only administrative proceedings challenging conduct that
has been preliminarily enjoined by a federal court in a collateral
proceeding brought by the Commission shall be subject to the fast track
schedule. In the event the preliminary injunction in the collateral
federal court proceeding is vacated, the Commission, in its discretion,
may take such action as it deems appropriate in the administrative
adjudication. Except as modified by this section, the rules contained
in Subparts A through I of Part 3 of this chapter shall govern fast
track procedures in adjudicative proceedings.
(b) Election of Fast Track Proceedings. Respondents making an
election under this section shall make such election by the later of
either: Three (3) days after service of the administrative complaint
challenging the merger or acquisition; or three (3) days after a
federal district court grants the Commission's request for a
preliminary injunction. Respondents electing fast track proceedings
shall do so by filing a notice of election of such expedited
proceedings with the Secretary.
(c) Interim Deadlines in Fast Track Proceedings. The following
deadlines shall govern all fast tract proceedings covered by this
section:
(1) The scheduling conference required by Sec. 3.21(b) shall be
held not later than three (3) days after the triggering event.
(2) Respondent's answer shall be filed within fourteen (14) days
after the triggering event.
(3) The ALJ shall file an initial decision within fifty-six (56)
days following the conclusion of the evidentiary hearing. The initial
decision shall be filed no later than one hundred ninety-five (195)
days after the triggering event, pursuant to paragraph (a) of this
section.
(4) Any party wishing to appeal an initial decision to the
Commission shall file a notice of appeal with the Secretary within
three (3) days after service of the initial decision. The notice shall
comply with Sec. 3.52(a) in all other respects.
(5) The appeal shall be in the form of a brief, filed within
twenty-one (21) days after service of the initial decision, and shall
comply with Sec. 3.52(b) in all other respects.
(6) Within fourteen (14) days after service of the appeal brief,
the appellee may file an answering brief which shall comply with
Sec. 3.52(c). Cross-appeals, as permitted in Sec. 3.52(c), may not be
raised in an appellee's answering brief. All issues raised on appeal
must be presented in the party's appeal brief and must be filed within
the deadline specified in paragraphs (c)(4) and (c)(5) of this section.
(7) Within five (5) days after service of the appellee's answering
brief, the appellant may file a reply brief, in accordance with
Sec. 3.52(d) in all other respects.
(d) Discovery. Discovery shall be governed by Subpart D of this
part. The ALJ may establish limitations on the number of depositions,
witnesses, or any document production, pursuant to his plenary
authority under Sec. 3.42(c)(6).
7. Section 3.12 is amended by revising the introductory text of
paragraph (a) to read as follows:
Sec. 3.12 Answer to complaint.
(a) Time for filing. A respondent shall file an answer within
twenty (20) days after being served with the complaint: Provided,
however, That the filing of a motion for a more definite statement of
the charges shall alter this period of time as follows, unless a
different time is fixed by the Administrative Law Judge: * * *
* * * * *
8. Section 3.21 is amended by redesignating paragraph (e) as new
paragraph (g), revising paragraphs (a) through (d), and adding new
paragraphs (e) and (f), to read as follows:
Sec. 3.21 Prehearing procedures.
(a) Meeting of the parties before scheduling conference. An early
as practicable before the prehearing scheduling conference described in
paragraph (b) of this section, counsel for the parties shall meet to
discuss the nature and basis of their claims and defenses and the
possibilities for a prompt settlement or resolution of the case, and to
agree, if possible, on a proposed discovery schedule, a preliminary
estimate of the time required for the hearing, and a proposed hearing
date, and on any other matters to be determined at the scheduling
conference.
(b) Scheduling conference. Not later than seven (7) days after the
answer is filed by the last answering respondent, the Administrative
Law Judge shall hold a scheduling conference. At the scheduling
conference, counsel for the parties shall be prepared to address their
factual and legal theories, a schedule of proceedings, possible
limitations on discovery, and other possible agreements or steps that
may aid in the orderly and expeditious disposition of the proceeding.
(c) Prehearing scheduling order. (1) Not later than two (2) days
after the scheduling conference, the Administrative Law Judge shall
enter an order that sets forth the results of the conference and
establishes a schedule of proceedings, including a plan of discovery,
dates for the submission and hearing of motions, the specific method by
which exhibits shall be numbered or otherwise identified and marked for
the record, and the time and place of a final prehearing conference and
of the evidentiary hearing.
(2) The Administrative Law Judge may grant a motion to extend any
deadline or time specified in this scheduling order only upon a showing
of good cause. Such motion shall set forth the total period of
extensions, if any, previously obtained by the moving party. In
determining whether to grant the motion, the Administrative Law Judge
shall consider any extensions already granted, the length of the
proceedings to date, and the need to conclude the evidentiary hearing
and render an initial decision in a timely manner. The Administrative
Law Judge shall not rule on ex parte motions to extend the deadlines
specified in the scheduling order, or modify such deadlines solely upon
stipulation or agreement of counsel.
(d) Meeting prior to final prehearing conference. Counsel for the
parties shall meet before the final prehearing conference described in
paragraph (e) of this section to discuss the matters set forth therein
in preparation for the conference.
(e) Final prehearing conference. As close to the commencement of
the evidentiary hearing as practicable, the Administrative Law Judge
shall hold a final prehearing conference, which counsel shall attend in
person, to submit any proposed stipulations as to law, fact, or
admissibility of evidence, exchange exhibit and witness lists, and
designate testimony to be presented by deposition. At this conference,
the Administrative Law Judge shall also resolve any outstanding
evidentiary matters or pending motions (except motions for summary
decision) and establish a final schedule for the evidentiary hearing.
(f) Additional prehearing conferences and orders. The
Administrative Law Judge shall hold additional prehearing and status
conferences or enter additional orders as may be needed to ensure the
orderly and expeditious disposition of a proceeding. Such conferences
shall be held in person to the extent practicable.
(g) Public access and reporting. * * *
9. Section 3.22 is amended by revising paragraphs (a) and (d), the
last sentence of paragraph (e), and the first full sentence of
paragraph (f), to read as follows:
[[Page 50647]]
Sec. 3.22 Motions.
(a) Presentation and disposition. During the time a proceeding is
before an Administrative Law Judge, all motions therein, except those
filed under Sec. 3.26, Sec. 3.42(g), or Sec. 4.17, shall be addressed
to and ruled upon, if within his or her authority, by the
Administrative Law Judge. The Administrative Law Judge shall certify to
the Commission any motion upon which he or she has no authority to
rule, accompanied by any recommendation that he or she may deem
appropriate. Such recommendation may contain a proposed disposition of
the motion or other relevant comments. The Commission may order the ALJ
to submit a recommendation or an amplification thereof. Rulings or
recommendations containing information granted in camera status
pursuant to Sec. 3.45 shall be filed in accordance with Sec. 3.45(f).
All written motions shall be filed with the Secretary of the
Commission, and all motions addressed to the Commission shall be in
writing. The moving party shall also provide a copy of its motion to
the Administrative Law Judge at the time the motion is filed with the
Secretary.
* * * * *
(d) Motions for extensions. The Administrative Law Judge or the
Commission may waive the requirements of this section as to motions for
extensions of time; however, the Administrative Law Judge shall have no
authority to rule on ex parte motions for extensions of time.
(e) Rules on motions for dismissal. * * * When a motion to dismiss
is made at the close of the evidence offered in support of the
complaint based upon an alleged failure to establish a prima facie
case, the Administrative Law Judge may defer ruling thereon until
immediately after all evidence has been received and the hearing record
is closed.
(f) Statement. Each motion to quash filed pursuant to Sec. 3.34(c),
each motion to compel or determine sufficiency pursuant to
Sec. 3.38(a), each motion for sanctions pursuant to Sec. 3.38(b), and
each motion for enforcement pursuant to Sec. 3.38(c) shall be
accompanied by a signed statement representing that counsel for the
moving party has conferred with opposing counsel in an effort in good
faith to resolve by agreement the issues raised by the motion and has
been unable to reach such an agreement. * * *
10. Section 3.24 is amended by revising paragraph (a)(1) and adding
a sentence between the existing first and second sentences of paragraph
(a)(2) to read as follows:
Sec. 3.24 Summary decisions.
(a) Procedure. (1) Any party to an adjudicatory proceeding may
move, with or without supporting affidavits, for a summary decision in
the party's favor upon all or any part of the issues being adjudicated.
The motion shall be accompanied by a separate and concise statement of
the material facts as to which the moving party contends there is not
genuine issue. Counsel in support of the complaint may so move at any
time after twenty (20) days following issuance of the complaint and any
party respondent may so move at any time after issuance of the
complaint. Any such motion by any party, however, shall be filed in
accordance with the scheduling order issued pursuant to Sec. 3.21, but
in any case at least twenty (20) days before the date fixed for the
adjudicatory hearing.
(2) * * * The opposing party shall include a separate and concise
statement of those material facts as to which the opposing party
contends there exists a genuine issue for trial, as provided in
Sec. 3.24(a)(3). * * *
* * * * *
11. Section 3.25 is amended by adding a new sentence between the
first and second sentences of paragraph (b) to read:
Sec. 3.25 Consent agreement settlements.
* * * * *
(b) * * * Such motion shall be filed with the Secretary of the
Commission, as provided in Sec. 4.2. * * *
* * * * *
12. Section 3.31 is amended by: adding a new sentence to the end of
paragraph (a); redesignating paragraphs (b), (c), (d), and (e) as
paragraphs (c), (d), (f), and (g), respectively; adding new paragraphs
(b) and (e); revising newly redesignated paragraphs (c)(1), (c)(2), the
first full sentence of (c)(3), the introductory text of newly
redesignated paragraph (c)(4)(i), and newly redesignated paragraph
(c)(4)(iii); revising the paragraph heading and adding a new sentence
at the end of newly redesignated paragraph (d)(1); and revising newly
redesignated paragraph (g), to read as follows:
Sec. 3.31 General provisions.
(a) * * * The parties shall, to the greatest extent practicable,
conduct discovery simultaneously; the fact that a party is conducting
discovery shall not operate to delay any other party's discovery.
(b) Initial disclosures. Complaint counsel and respondent's counsel
shall, within five (5) days of receipt of a respondent's answer to the
complaint and without awaiting a discovery request, provide to each
other:
(1) The name, and, if known, the address and telephone number of
each individual likely to have discoverable information relevant to the
allegations of the Commission's complaint, to the proposed relief, or
to the defenses of the respondent, as set forth in Sec. 3.31(c)(1);
(2) A copy of, or a description by category and location of, all
documents, data compilations, and tangible things in the possession,
custody, or control of the Commission or respondent(s) that are
relevant to the allegations of the Commission's complaint, to the
proposed relief, or to the defenses of the respondent, as set forth in
Sec. 3.31(c)(1); unless such information or materials are privileged as
defined in Sec. 3.31(c)(2), pertain to hearing preparation as defined
in Sec. 3.31(c)(3), pertain to experts as defined in Sec. 3.31(c)(4),
or are obtainable from some other source that is more convenient, less
burdensome, or less expensive. A party shall make its disclosures based
on the information then reasonably available to it and is not excused
from making its disclosures because it has not fully completed its
investigation.
(c) Scope of discovery. * * *
(1) In general; limitations. Parties may obtain discovery to the
extent that it may be reasonably expected to yield information relevant
to the allegations of the complaint, to the proposed relief, or to the
defenses of any respondent. Such information may include the existence,
description, nature, custody, condition and location of any books,
documents, or other tangible things and the identity and location of
persons having any knowledge of any discoverable matter. Information
may not be withheld from discovery on grounds that the information will
be inadmissible at the hearing if the information sought appears
reasonably calculated to lead to the discovery of admissible evidence.
The frequency or extent of use of the discovery methods otherwise
permitted under these rules shall be limited by the Administrative Law
Judge if he determines that:
(i) The discover sought is unreasonably cumulative or duplicative,
or is obtainable from some other source that is more convenient, less
burdensome, or less expensive;
(ii) The party seeking discovery has had ample opportunity by
discovery in the action to obtain the information sought; or
(iii) The burden and expense of the proposed discovery outweigh its
likely benefit.
[[Page 50648]]
(2) Privilege. The Administrative Law Judge may enter a protective
order denying or limiting discovery to preserve the privilege of a
witness, person, or governmental agency as governed by the
Constitution, any applicable act of Congress, or the principles of the
common law as they may be interpreted by the Commission in the light of
reason and experience.
(3) Hearing preparations: Materials. Subject to the provisions of
paragraph (c)(4) of this section, a party may obtain discovery of
documents and tangible things otherwise discoverable under paragraph
(c)(1) of this section and prepared in anticipation of litigation or
for hearing by or for another party or by or for that other party's
representative (including the party's attorney, consultant, or agent)
only upon a showing that the party seeking discovery has substantial
need of the materials in the preparation of its case and that the party
is unable without undue hardship to obtain the substantial equivalent
of the materials by other means. * * *
(4) Hearing preparation: Experts. (i) Discovery of facts known and
opinions held by experts, otherwise discoverable under the provisions
of paragraph (c)(1) of this section and acquired or developed in
anticipation of litigation or for hearing, may be obtained only as
follows: * * *
(ii) * * *
(iii) The Administrative Law Judge may require as a condition of
discovery that the party seeking discovery pay the expert a reasonable
fee, but not more than the maximum specified in 5 U.S.C. 3109 unless
the parties have stipulated a higher amount, for time spent in
responding to discovery under paragraphs (c)(4)(i)(B) and (c)(4)(ii) of
this section.
(d) Protective orders; order to preserve evidence. (1) * * * Such
an order may also be issued to preserve evidence upon a showing that
there is substantial reason to believe that such evidence would not
otherwise be available for presentation at the hearing.
(2) * * *
(e) Supplementation of disclosures and responses. A party who has
made an initial disclosure under Sec. 3.31(b) or responded to a request
for discovery with a disclosure or response is under a duty to
supplement or correct the disclosure or response to include information
thereafter acquired if ordered by the Administrative Law Judge or in
the following circumstances:
(1) A party is under a duty to supplement at appropriate intervals
its initial disclosures under Sec. 3.31(b) if the party learns that in
some material respect the information disclosed is incomplete or
incorrect and if the additional or corrective information has not
otherwise been made known to the other parties during the discovery
process or in writing.
(2) A party is under a duty seasonably to amend a prior response to
an interrogatory, request for production, or request for admission if
the party learns that the response is in some material respect
incomplete or incorrect.
(f) Stipulations. * * *
(g) Ex parte rulings on applications for compulsory process.
Applications for the issuance of subpoenas to compel testimony at an
adjudicative hearing pursuant to Sec. 3.34 may be made ex parte, and,
if so made, such applications and rulings thereon shall remain ex parte
unless otherwise ordered by the Administrative Law Judge or the
Commission.
13. Section 3.33 is amended by revising paragraph (a), the first
and second full sentences of paragraph (c), and the introductory text
of paragraph (e), and by removing and reserving paragraph (b), to read
as follows:
Sec. 3.33 Depositions.
(a) In general. Any party may take a deposition of a named person
or of a person or persons described with reasonable particularity,
provided that such deposition is reasonably expected to yield
information within the scope of discovery under Sec. 3.31(c)(1). Such
party may, by motion, obtain from the Administrative Law Judge an order
to preserve relevant evidence upon a showing that there is substantial
reason to believe that such evidence would not otherwise be available
for presentation at the hearing. Depositions may be taken before any
person having power to administer oaths, either under the law of the
United States or of the state or other place in which the deposition is
taken, who may be designated by the party seeking the deposition,
provided that such person shall have no interest in the outcome of the
proceeding. The party seeking the deposition shall serve upon each
person whose deposition is sought and upon each party to the proceeding
reasonable notice in writing of the time and place at which it will be
taken, and the name and address of each person or persons to be
examined, if known, and if the name is not known, a description
sufficient to identify them.
(b) [Reserved]
(c) Notice to corporation or other organization. A party may name
as the deponent a public or private corporation, partnership,
association, governmental agency other than the Federal Trade
Commission, or any bureau or regional office to the Federal Trade
Commission, and describe with reasonable particularity the matters on
which examination is requested. The organization so names shall
designate one or more officers, directors, or managing agents, or other
persons who consent to testify on its behalf, and may set forth, for
each person designated, the matters on which he will testify. * * *
* * * * *
(e) Depositions upon written questions. A party desiring to take a
deposition upon written questions shall serve them upon every other
party with a notice stating: * * *
* * * * *
14. Section 3.34 is amended by revising paragraphs (a) and (b), and
by revising the paragraph heading and adding a new sentence to the end
of existing paragraph (c), to read as follows:
Sec. 3.34 Subpoenas.
(a) Subpoenas ad testificandum--(1) Prehearing. The Secretary of
the Commission shall issue a subpoena, signed but otherwise in blank,
requiring a person to appear and give testimony at the taking of a
deposition to a party requesting such subpoena, who shall complete it
before service.
(2) Hearing. Application for issuance of a subpoena commanding a
person to attend and give testimony at an adjudicative hearing shall be
made in writing to the Administrative Law Judge. Such subpoena may be
issued upon a showing of the reasonable relevancy of the expected
testimony.
(b) Subpoenas duces tecum; subpoenas to permit inspection of
premises. The Secretary of the Commission, upon request of a party,
shall issue a subpoena, signed but otherwise in blank, commanding a
person to produce and permit inspection and copying of designated
books, documents, or tangible things, or commanding a person to permit
inspection of premises, at a time and place therein specified. The
subpoena shall specify with reasonable particularity the material to be
produced. The person commanded by the subpoena need not appear in
person at the place of production or inspection unless commanded to
appear for a deposition or hearing pursuant to paragraph (a) of this
section. As used herein, the term ``documents'' includes writings,
drawings, graphs, charts, handwritten notes, film, photographs, audio
and video recordings and any such representations stored on a computer,
a computer disk, CD-ROM, magnetic or electronic tape, or any other
[[Page 50649]]
means of electronic storage, and other data compilations from which
information can be obtained in machine-readable form (translated, if
necessary, into reasonably usable form by the person subject to the
subpoena). A subpoena duces tecum may be used by any party for purposes
of discovery, for obtaining documents for use in evidence, or for both
purposes, and shall specify with reasonable particularity the materials
to be produced.
(c) Motions to quash; limitation on subpoenas to other government
agencies. * * * Nothing in paragraphs (a) and (b) of this section
authorizes the issuance of subpoenas requiring the appearance of, or
the production of documents in the possession, custody, or control of,
an official or employee of a governmental agency other than the
Commission, which may be authorized only in accordance with Sec. 3.36.
15. Section 3.35 is amended by revising the first sentence of
paragraph (a)(1), the third sentence of paragraph (a)(2), and paragraph
(b)(1) to read as follows:
Sec. 3.35 Interrogatories to parties.
(a) Availability; procedures for use. (1) Any party may serve upon
any other party written interrogatories, not exceeding twenty-five (25)
in number, including all discrete subparts, to be answered by the party
served or, if the party served is a public or private corporation,
partnership, association or governmental agency, by any officer or
agent, who shall furnish such information as is available to the party.
* * *
(2) * * * The party upon whom the interrogatories have been served
shall serve a copy of the answers, and objections, if any, within
thirty (30) days after the service of the interrogatories. * * *
(b) Scope; use at hearing. (1) Interrogatories may relate to any
matters that can be inquired into under Sec. 3.31(c)(1), and the
answers may be used to the extent permitted by the rules of evidence.
* * * * *
16. Section 3.36 is revised to read as follows:
Sec. 3.36 Applications for subpoenas for records, or appearances by
officials or employees, of governmental agencies other than the
Commission.
(a) Form. An application for issuance of a subpoena for the
production of documents, as defined in Sec. 3.34(b), or for the
issuance of a subpoena requiring access to documents or other tangible
things, for the purposes described in Sec. 3.37(a), in the possession,
custody, or control of a governmental agency other than the Commission
or the officials or employees of such other agency, or for the issuance
of a subpoena requiring the appearance of an official or employee of
another governmental agency, shall be made in the form of a written
motion filed in accordance with the provisions of Sec. 3.22(a). No
application for records pursuant to Sec. 4.11 of this chapter or the
Freedom of Information Act may be filed with the Administrative Law
Judge.
(b) Content. The motion shall satisfy the same requirements for a
subpoena under Sec. 3.34 or a request for production or access under
Sec. 3.37, together with a specific showing that:
(1) the material sought is reasonable in scope;
(2) if for purposes of discovery, the material falls within the
limits of discovery under Sec. 3.31(b)(1), or, if for an adjudicative
hearing, the material is reasonably relevant; and
(3) the information or material sought cannot reasonably be
obtained by other means.
17. Section 3.37 is revised to read as follows:
Sec. 3.37 Production of documents and things; access for inspection
and other purposes.
(a) Availability; procedures for use. Any party may serve on
another party a request: to produce and permit the party making the
request, or someone acting on the party's behalf, to inspect and copy
any designated documents, as defined in Sec. 3.34(b), or to inspect and
copy, test, or sample any tangible things which are within the scope of
Sec. 3.31(c)(1) and in the possession, custody or control of the party
upon whom the request is served; or to permit entry upon designated
land or other property in the possession or control of the party upon
whom the order would be served for the purpose of inspection and
measuring, surveying, photographing, testing, or sampling the property
or any designated object or operation thereon, within the scope of
Sec. 3.31(c)(1). Each such request shall specify with reasonable
particularity the documents or things to be inspected, or the property
to be entered. Each such request shall also specify a reasonable time,
place, and manner of making the inspection and performing the related
acts. A party shall make documents available as they are kept in the
usual course of business or shall organize and label them to correspond
with the categories in the request. A person not a party to the action
may be compelled to produce documents and things or to submit to an
inspection as provided in Sec. 3.34.
(b) Response; objections. The response of the party upon whom the
request is served shall state, with respect to each item or category,
that inspection and related activities will be permitted as requested,
unless the request is objected to, in which event the reasons for the
objection shall be stated. If objection is made to part of an item or
category, the part shall be specified and inspection permitted of the
remaining parts. The party submitting the request may move for an order
under Sec. 3.38(a) with respect to any objection to or other failure to
respond to the request or any part thereof, or any failure to permit
inspection as requested.
18. Section 3.38 is amended by revising the section heading and
paragraph (a) to read as follows:
Sec. 3.38 Motion for order compelling disclosure or discovery;
sanctions.
(a) Motion for order to compel. A party may apply by motion to the
Administrative Law Judge for an order compelling disclosure or
discovery, including a determination of the sufficiency of the answers
or objections with respect to the initial disclosures required by
Sec. 3.31(b), a request for admission under Sec. 3.32, a deposition
under Sec. 3.33, or an interrogatory under Sec. 3.35.
(1) Initial disclosures; requests for admission; depositions;
interrogatories. Unless the objecting party sustains its burden of
showing that the objection is justified, the Administrative Law Judge
shall order that an answer be served or disclosure otherwise be made.
If the Administrative Law Judge determines that an answer or other
response by the objecting party does not comply with the requirements
of these rules, he may order either that the matter is admitted or that
an amended answer or response be served. The Administrative Law Judge
may, in lieu of these orders, determine that final disposition may be
made at a prehearing conference or at a designated time prior to trial.
(2) Requests for production or access. If a party fails to respond
to or comply as requested with a request for production or access made
under Sec. 3.37(a), the discovering party may move for an order to
compel production or access in accordance with the request.
* * * * *
19. Section 3.38A is amended by revising the first sentence of
paragraph (a) to read as follows:
[[Page 50650]]
Sec. 3.38A Withholding requested material.
(a) Any person withholding material responsive to a subpoena issued
pursuant to Sec. 3.34, written interrogatories requested pursuant to
Sec. 3.35, a request for production or access pursuant to Sec. 3.37, or
any other request for the production of materials under this part,
shall assert a claim of privilege or any similar claim not later than
the date set for production of the material. * * *
* * * * *
20. Section 3.43 is amended by revising paragraph (b) to read as
follows:
Sec. 3.43 Evidence.
* * * * *
(b) Admissibility; exclusion of relevant evidence; mode and order
of interrogation and presentation. Relevant, material, and reliable
evidence shall be admitted. Irrelevant, immaterial, and unreliable
evidence shall be excluded. Evidence, even if relevant, may be excluded
if its probative value is substantially outweighed by the danger of
unfair prejudice, confusion of the issues, or if the evidence would be
misleading, or by considerations of undue delay, waste of time, or
needless presentation of cumulative evidence. The Administrative Law
Judge shall exercise reasonable control over the mode and order of
interrogating witnesses and presenting evidence so as to
(1) make the interrogation and presentation effective for the
ascertainment of the truth,
(2) avoid needless consumption of time, and
(3) protect witnesses from harassment or undue embarrassment.
* * * * *
21. Section 3.44 is amended by adding a new paragraph (c) to read
as follows:
Sec. 3.44 Record.
* * * * *
(c) Closing of the hearing record. Immediately upon completion of
the evidentiary hearing, the Administrative Law Judge shall issue an
order closing the hearing record. The Administrative Law Judge shall
retain the description to permit or order correction of the record as
provided in Sec. 3.44(b).
22. Section 3.45 is amended by adding a new paragraph (f) to read
as follows:
Sec. 3.45 In camera orders.
* * * * *
(f) When in camera information is included in rulings or
recommendations of the Administrative Law Judge. If the Administrative
Law Judge includes in any ruling or recommendation information that has
been granted in camera status pursuant to Sec. 3.45(b), the
Administrative Law Judge shall file two versions of the ruling or
recommendation. A complete version shall be marked ``In Camera'' on the
first page and shall be serve upon the parties. The complete version
will be placed in the in camera record of the proceeding. An expurgated
version, to be filed within five (5) days after the filing of the
complete version, shall omit the in camera information that appears in
the complete version, shall be marked ``Public Record'' on the first
page, shall be served upon the parties, and shall be included in the
public record of the proceeding.
23. Section 3.46 is amended by revising the first full sentence of
paragraph (a) to read as follows:
Sec. 3.46 Proposed findings, conclusions, and order.
(a) General. Upon the closing of the hearing record, or within a
reasonable time thereafter fixed by the Administrative Law Judge, any
party may file with the Secretary of the Commission for consideration
of the Administrative Law Judge proposed findings of fact, conclusions
of law, and rule or order, together with reasons therefor and briefs in
support thereof. * * *
* * * * *
24. Section 3.51 is amended by revising paragraph (a) and paragraph
(c)(1) to read as follows:
Sec. 3.51 Initial decision.
(a) When filed and when effective. The Administrative Law Judge
shall file an initial decision within ninety (90) days after closing
the hearing record pursuant to Sec. 3.44(c), or within thirty (30) days
after a default or the granting of a motion for summary decision or
waiver by the parties of the filing of proposed findings of fact,
conclusions of law and order, or within such further time as the
Commission may by order allow upon written request from the
Administrative Law Judge. In no event shall the initial decision be
filed any later than one (1) year after the issuance of the
administrative compliant, except that the Administrative Law Judge may,
upon a finding of extraordinary circumstances, extend the one-year
deadline for a period of up to sixty (60) days. Such extension, upon
its expiration, may be continued for additional consecutive periods of
up to sixty (60) days, provided that each additional period is based
upon a finding by the Administrative Law Judge that extraordinary
circumstances are still present. The pendency of any collateral federal
court proceeding that relates to the administrative adjudication shall
toll the one-year deadline for filing the initial decision. The ALJ may
stay the administrative proceeding until resolution of the collateral
federal court proceeding. Once issued, the initial decision shall
become the decision of the Commission thirty (30) days after service
thereof upon the parties or thirty (30) days after the filing of a
timely notice of appeal, whichever shall be later, unless a party
filing such a notice shall have perfected an appeal by the timely
filing of an appeal brief or the Commission shall have issued an order
placing the case on its own docket for review or staying the effective
date of the decision.
(b) * * *
(c) Content. (1) The initial decision shall include a statement of
findings (with specific page references to principal supporting items
of evidence in the record) and conclusions, as well as the reasons or
basis therefor, upon all the material issues of fact, law, or
discretion presented on the record (or those designated under paragraph
(c)(2) of this section) and an appropriate rule or order. Rulings
containing information granted in camera status pursuant to Sec. 3.45
shall be filed in accordance with Sec. 3.45(f).
* * * * *
25. Section 3.55 is amended by revising the first sentence to read
as follows:
Sec. 3.55 Reconsideration.
Within fourteen (14) days after completion of service of a
Commission decision, any party may file with the Commission a petition
for reconsideration of such decision, setting forth the relief desired
and the grounds in support thereof. * * *
PART 4--MISCELLANEOUS RULES
26. The authority for Part 4 continues to read as follows:
Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46.
27. Section 4.2 is amended by adding a new sentence at the end of
paragraph (c) and a new sentence at the end of paragraph (e)(1) to read
as follows:
Sec. 4.2 Requirements as to form, and filing of documents other than
correspondence.
* * * * *
(c) Copies. * * * With respect to motions under Sec. 3.22, the
moving party shall provide a copy of its motion to the Administrative
Law Judge at the time the motion is filed with the Secretary.
* * * * *
[[Page 50651]]
(e) Signature. (1) * * * In addition, motions filed pursuant to
Sec. 3.22 shall include the name, address, and telephone number of
counsel.
By direction of the Commission.
Donald S. Clark,
Secretary.
Concurring Statement of Commissioner Mary L. Azcuenaga
Amendment of the Commission's Procedural Rules Governing
Adjudicative Proceedings
The Commission today amends its procedural rules governing
administrative adjudications. I welcome the amended rules as a first
step in reforming the Commission's adjudicative process. Some of the
amendments seem clearly to be good ideas and the others may be worth
a try to help expedite the Commission's adjudicative proceedings.
Whether they will result in net benefits remains to be seen.
Although rule changes to expedite adjudications are a starting point
for improving the adjudicative process, reform ultimately should
focus on improving the quality of the adjudicative record and of
adjudicative decisions to help ensure that they meet the test of
appeal.
I support further examination of the entire process, including
how to focus discovery and hearings more precisely on the pertinent
facts, and how best to prepare the record for efficient use in
formulating reasoned and well supported decisions. I look forward to
the next installment of this effort.
[FR Doc. 96-24316 Filed 9-25-96; 8:45 am]
BILLING CODE 6750-01-M
