Exxon Corporation

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IN THE MATTER OF EXXON CORPORATION, ET AL.

Docket 8!1:14. Order, Mar, 1.975 Affirmation of law judge 5 denial of respondents' motions to rescind the order for preservation of records.

ORDER AFFIRMING Dr-NIAL OF MOTIONS TO RESCIND ORDER FOR PRESERVATION OF RECORDS This matter is before us on respondents' appeal, pursuant to Section 23(d) of the Commission s Rules of Practice, from the administrative law judge s denial of their motions io rescind his Order for Preservation of Records, issued Nov. 12, 1974 lhereinafter sometimes referred to as "the Order ), which prohibits respondents and complaint counsel from destroying "all presently existing documents, writings, recordings, or other records of any kind whatsoever which relate in any way to the exploration, production, transportation, and refining of crude qil and the transportation and marketing of refined petroleum products " The Commission placed this matter on its docket for review, solely on the question of the authority of the Commission and the law judge to issue a record-preservation order. Although respondents are COITect in pointing out that such an order has never been issued in a Commission proceeding, the failure to exercise a power does not necessarily prove its non-existence. National Petroleum Refiners Association v. Federal Trade Commission, 482 2d 672, 686 (D.C. Cir. 1973), ccrt. denied 415 U.S. 951 (1974). This is especially true when, as is the case here, the need for the order in question wil arise only rarely. Normally, the parties to a suit wil be able to identify the documents which they wil need to support their respective cases with sufficient specificity to seek them by compulsory process. However, it is the position of complaint counsel that a considerable amount of discovery wil be needed just to identify all of the relevant materials in respondents' possession. To prevent the destruction of such materials during this early phase of discovery, complaint counsel contend that the law judge should supervise the destruction of all materials which appear to be within the general scope of the case.

Thus the effect of this order, is not, as respondents have suggested to require that they preserve irrelevant documents but, rather that they preserve records until their relevance to the proceeding can be determined with some degree of certainty. Respondents point out that * Forappearann," "eO' p. herein 674 Order the ordcr has thus far caused them suhstantial burden and promises to cause them even more due to the expense of gtaring all of the documents encompassed by the order. However, if the order is within the power of the law judge to issue and he believes it necessary to the litigation, the hardship it brings upon the parties cannot be a ground for striking it. Furthermore, this burden can be, and has been, reduced by the law judge s permitting the destruction of materials which respondents can show are irrelevant, as well as those which can be duplicated from others. Order Interpreting Order for Preservation of Records, Nov. 27, 1974; Order Modifying Preservation Order, Feb. 6 1975.

Having considered the pleadings filed by all parties in this matter we conclude that the law judge acted properly in issuing an order of such nature. First, Section 5(b) of the Federal Trade Commission Act empowering the Commission to conduct hearings into possible unfair methods of competition, necessarily implies the power to preserve evidence which might be needed in such hearings until it can be identified and brought before the Commission. This power is a logical extcnsion of the fact finder s duty to make factual findings against a party which destroys material which is arguably relevant to the case at hand, concluding in that case that such material was relevant and contained information adverse to the party. Furthermore, Section 9 of the Act, in granting the Commission access to all evidence of any corporation against whom it is proceeding for inspection and copying must include the lesser power to merely preserve that which might be evidence.

We reject respondents' argument that the order is an "injunction and that, as such, it can bc obtained only from a court. We find the order to be analogous to a protective order which, although it may be prohibitive in nature and can govern the conduct of persons long after the conclusion of a proceeding has never, to our knowledge, been characterized as an injunction. In fact the order is distinguishable from an injunction in that it concerns the conduct of the proceeding rather than the actual merits thereof.

Having concluded that the Commission itself has the authority preserve records, we also conclude that neither the Administrative Procedure Act nor any other applicable statute limits our authority to delegate such power to the law judge. In Section 556(c), the Act provides that employees presiding at hearings may, inter alia issue subpoenas authorjzed by law; rule on offers of proof and receive relevant evidence; " and "dispose of procedural requests or similar matters." These powers are essentially the same as those contained in the Federal Trade Commission Act and, for the reasons discussed Order 85 F.

above, they must include the power to preserve records. Likewise, we find that Section 3.42(c) of our rules empowering the law judges to issue subpoenas rule upon offers of proof and receive evidence " and rule upon all procedural and other motions appropriate in an adjudicative proceeding," in fact delegates to them the record preservation power.

As stated at the outset, the only issue now before us is whether the Commission and its law judges have the authority to issue a document preservation order. However, to clarify this novel matter of Commission procedure, we wil briefly comment on several points raised by respondents, which do not bear directly upon the question of authority. First, they argue that the law judge erred in issuing the order ex parte since there is nothing in the record to indicate any need for departing from the normal procedure set forth in Section 8.22 of the rules. We agree, but conclude that the error was harmless inasmuch- as the law judge provided for immediate review of the order and he permitted this appeal.

Respondents also urge that the order is unfair in that it applies only to them and to complaint counsel and not to the rest of the United States Government, from whom they expect to obtain a great deal of material for their defense. Respondents contend that the entire Government is a party to this proceeding since the Commission as an agency of the Government fied the complaint. Although the Commission is in fact part of the Government, for litigation purposes it is independent of other governmental bodies, such as Congress, the executive branch and the courts. The principle of this independence v. United States 295 U.S. 602 was confirmed in Humphrey s Executor 624, 625 (1935). Thus the fact that the Commission as a quasi-judicial quasi-legislative body, is a party to an action does not mean that a1l other governmental bodies are also parties thereto. Finally, respondents argue that complaint counsel failed to make an adequate showing of need for the order, especially because respondents' own procedures for preserving relevant evidence plus statutory prohibitions against the destruction of such evidence in Section 9 of the 'l. C. Act and 18 U. C. !j!jllOl, 1505 (1970), fulfi1 the same function as the order. However, the question of need for a document preservation order, like the need for a protective order, is solely within the discretion of the law judge and, abscnt clear abuse thereof, which respondents have failed to show in this case, the Commission wil not intervene. Accordingly, It is ordered That the law judge s denial of respondents' motions to 1974, be, and rescind the order for Preservation of Records of Nov. 12, it hereby is, affirmed.

Dl\.l..J V LrlU J .uH,-' 'J, 677 Order