Certiorari Denied April 5, 1965. See 85 S.Ct. 1110.
BREITENSTEIN, Circuit Judge.
These appeals, which were considered on a consolidated record, relate to orders on motions to quash subpoenas duces tecum issued to non-party witnesses. The trial court modified the subpoenas by striking therefrom a requirement as to an identified category of information and otherwise denied the motions to quash.
The action was brought by Uinta Oil Refining Company and Utah Cooperative Association, which are not parties to these appeals, against Continental Oil Company and Texaco, Inc., appellees herein, to recover damages for alleged violations of §§ 1 and 2 of the Sherman Act
The Sherman Act allegations of the complaint charge a conspiracy to restrain trade and an attempt to monopolize commerce in gasoline by controlling sources of supply, by fixing and maintaining wholesale and retail gasoline prices, and by suppressing competition of independent jobbers. The Robinson-Patman violations are said to consist of price discriminations which effect competition and tend to monopoly. The Continental answer denies these allegations and, as an affirmative defense to the Robinson-Patman charge, says that if there has been price discrimination, the lower price to any purchaser was made in good faith to meet an equally low price of a competitor or was in response to changing conditions affecting the gasoline market.
Continental caused subpoenas duces tecum to be served on the appellants and a number of other non-party witnesses who are independent oil marketers. The appellants moved to quash the subpoenas. After extensive hearings the trial court filed a comprehensive memorandum and ordered the production of information by the non-party witnesses relating to their purchase price of gasoline, their sale prices and gallonage of gasoline sold other than at retail, and the number and location of their service stations. Texaco has adopted and supports the position of Continental.
The threshold question is the jurisdiction of this court to review the order. Under 28 U.S.C. § 1291 the courts of appeals have jurisdiction "of appeals from all final decisions of the district courts of the United States."
Appellants recognize that generally the denial of a motion to quash a subpoena issued under Rule 45, F.R.Civ. P., is not appealable
Beneficial was followed in Swift & Co. Packers v. Compania Colombiana Del Caribe, 339 U.S. 684, 688-689, 70 S.Ct. 861, 865, 94 L.Ed. 1206, where the Court held an interlocutory order appealable and said that in the circumstances of the case the provision for appeals only from final decision "should not be construed so as to deny effective review of a claim fairly severable from the context of a larger litigious process." The principle was again recognized in DiBella v. United States, 369 U.S. 121, 125, 82 S.Ct. 654, 657, 7 L.Ed.2d 614, where the Court said that "the concept of finality as a condition of review has encountered situations which make clear that it need not invite self-defeating judicial construction."
The threshold question of appealability is not to be decided by rote,
Severability of the appellants' claim from the issues presented by the plaintiffs and defendants must not be confused with relevance of the information sought by the subpoenas. In one instance the question is the right of protection against disclosure of alleged trade secrets. In the other the question is the pertinence of the information to main suit issues. Relevance will be determined in the trial of the main issues and the dissatisfied party will have the right of review. So far as the appellants are concerned the ultimate determination of relevance will be an "empty rite"
We are not impressed with the argument of Continental that the appellants may obtain review by disobedience of the order and appeal from a subsequent adjudication of contempt. These non-party witnesses should not be required to expose themselves to the hazard of punishment
What we have said does not mean that every order on a motion to quash a subpoena is appealable. Here we have a serious claim by non-party witnesses of a right to protection from the disclosure of trade secrets. Their claims are, in the language of Swift & Co. Packers v. Compania Colombiani Del Caribe,
The subpoena as limited by the court order requires the production of documents showing, for the state of Utah during a designated period:
Rule 45(d) covers subpoenas for taking depositions and permits them to require the production of designated documents which are within the scope of the examination permitted by Rule 26(b), subject however to the provisions of Rule 30(b) and Rule 45(b). Rule 26(b) permits the examination of a deponent on any matter "which is relevant to the subject matter involved in the pending action." Rule 30(b) provides that "for good cause shown" the court may make any order "which justice requires to protect the party or witness from annoyance, embarrassment, or oppression." Rule 45(b) authorizes the court to "quash or modify the subpoena if it is unreasonable and oppressive." Accordingly, if the documents are relevant and are sought for good cause they should be enforced unless the documents are privileged or the subpoenas are unreasonable, oppressive, annoying, or embarrassing.
Relevancy is shown. The complaint charges restraint of trade and monopoly in the fixing of gasoline prices and in the suppression of competition. Affidavits of some of the appellants establish that "fierce" competition pervades the Utah gasoline market; that appellants are "substantial competitors" of Continental; and that several of the appellants are supplied by major integrated oil companies which the complaint names as co-conspirators with Continental. The Robinson-Patman charge of price discrimination is met by the defense of a good faith effort to meet competition. Continental submitted proof that it was losing market position in Utah; that its management believed that its wholesale prices were above competitive levels; that competitive wholesale prices could not be obtained by estimates from observable retail price levels; and that from the available information it concluded that most independent service stations, including those supplied or operated by appellants, were being charged less for gasoline than Continental was charging its dealers. The wholesale price and volume of admitted competitors directly pertain to both the Sherman Act and the Robinson-Patman Act charges and to the defenses asserted against those charges.
Appellants insist that the good faith meeting competition defense is not available because of the decision in Federal Trade Commission v. Sun Oil Co., 371 U.S. 505, 83 S.Ct. 358, 9 L.Ed.2d 466. The cases are different. In Sun Oil an integrated supplier-dealer lowered its price to the lessee-operator of one of its stations so that he could meet the competition of another retailer. The court said
We are dealing with a preliminary matter — the right to take depositions and to force the production of documents. The showing of Continental is of competition in the area of the charges made in the complaint and of operations at the same functional level. In these circumstances the good faith meeting competition defense is available under § 2(b) of the Robinson-Patman Act. Additionally, we believe that the showing is sufficient under the Sherman Act charges of restraint of trade and monopoly by fixing gasoline prices and suppressing competition of independent jobbers. Exploration into the businesses of admitted rivals may well reveal the validity or invalidity of the charge of competition suppression.
In holding that the material sought by the subpoenas is relevant to the issues of the case we express no opinion as to whether any evidence so produced will be admissible at the trial or, if admissible, what its effect will be. Such determinations are not appropriate at this stage of the case.
The evidence sought has substantial value because it is relevant and vital to the defenses asserted. The fact that it might be obtained, at least in part, from others has no pertinence because a person may not avoid a subpoena by saying that the evidence sought from him is obtainable from another. The argument that Continental knows the appellants' retail prices, which are posted in public view, means nothing because Continental asserts that competition exists at the wholesale level.
Appellants say that if Continental did not know the wholesale prices, it may not rely on them to support a meeting competition defense. The test is not actual knowledge but "the existence of facts which would lead a reasonable and prudent person to believe that the granting of a lower price would in fact meet the equally low price of a competitor."
Enough has been said to dispose of the argument that Continental has failed to show good cause. The burden of so showing is sustained by proof of relevance and need.
Appellants contend that general relevancy is not sufficient to require a nonparty witness to divulge trade secrets. The claimed trade secrets do not relate to processes, formulas, or methods but rather to price, cost, and volume of sales of gasoline. The argument is that the disclosure of this information will enable Continental and others to destroy appellants' businesses because the integrated companies can lose money in marketing and still show an over-all profit while the small independents, such as appellants, cannot do so. The position is based on the fact that Continental and appellants compete in the wholesale market. No absolute privilege protects the information sought here from disclosure in discovery proceedings.
In the case at bar the trial court reasonably concluded that the interests of justice require the enforcement of the subpoenas. With great care it imposed conditions designed to protect appellants. The documents were made available only to counsel and independent certified public accountants and only for the purposes of the case. The court forbade the use of the material "for business or competitive purposes." The right to presence at the depositions was limited. The documents and depositions were to be held by the clerk under seal with access thereto only upon order of the judge. The right to further protective orders upon an appropriate showing was specifically recognized.
In our opinion the actions of the trial court display a sound exercise of discretion. The need for the information is held paramount but reasonable protective measures are supplied to minimize the effect on the appellants. We are concerned with preliminary matters. If the information obtained is pertinent to the antitrust charges and defenses which arise from the Utah gasoline price wars, that information should be available at the trial. Harm may result to some of the appellants but that harm will be a by-product of competition.