[Federal Register Volume 76, Number 162 (Monday, August 22, 2011)]
[Rules and Regulations]
[Pages 52249-52253]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-21019]
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FEDERAL TRADE COMMISSION
16 CFR Parts 3 and 4
Rules of Practice
AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').
ACTION: Final rule amendments.
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SUMMARY: The FTC is amending its Rules of Practice for its adjudicative
process, including those regarding the initiation of discovery,
limitations on discovery, the Standard Protective Order, the admission
of certain hearsay evidence, the video recording of proceedings, the
designation of confidentiality on documents, the timing for oral
argument on appeal, and
[[Page 52250]]
a reference to the Equal Access to Justice Act.
DATES: These amendments are effective on August 22, 2011, and will
govern all Commission adjudicatory proceedings that are commenced after
that date. They will also govern all Commission adjudicatory
proceedings that are pending on August 22, 2011, except to the extent
that, in the opinion of the Commission, their application to a
particular proceeding would not be feasible or would work an injustice.
FOR FURTHER INFORMATION CONTACT: Robert B. Mahini, Attorney, (202) 326-
2642, Office of the General Counsel, Federal Trade Commission, 600
Pennsylvania Avenue, NW., Washington DC 20580.
SUPPLEMENTARY INFORMATION: On May 1, 2009, the Commission implemented
changes to Parts 3 and 4 of the agency's Rules of Practice.\1\ After
further review of these changes and other aspects of Parts 3 and 4, the
Commission is making new changes to the Rules of Practice, which are
discussed below. The immediate implementation of this rule without
prior notice and the opportunity for public comment is appropriate
because this rule is one of agency procedure and practice and therefore
is exempt from notice and comment rulemaking requirements and from the
30-day publication requirement under the Administrative Procedure Act,
5 U.S.C. 553(b)(A)-(B) & (d).\2\
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\1\ 74 FR 20205 (2009).
\2\ The final rule amendments are not subject to the
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2),
604(a). The rule revisions to part 3 are also not subject to the
requirements of the Paperwork Reduction Act, which contains an
exemption for information collected during the conduct of
administrative proceedings or investigations. 44 U.S.C.
3518(c)(1)(B)(ii); 5 CFR 1320.4. To the extent that Rule 4.2 applies
to filings that do not fall within this exception, the Office of
Management and Budget has approved the collection of information,
along with other applications and notices to the Commission, and has
assigned control number 3084-0047. The revisions to Rule 4.2 do not
substantially or materially modify this collection of information.
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Section 3.31: General Discovery Provisions.
The Commission is amending Section 3.31(a) to clarify that
discovery demands cannot commence before the procedure set forth in
Section 3.21(c). Under Section 3.21(c), the Administrative Law Judge,
[n]ot later than 2 days after the scheduling conference, [must]
enter an order that sets forth the results of the conference and
establishes a schedule of proceedings that will permit the
evidentiary hearing to commence on the date set by the Commission,
including a plan of discovery that addresses the deposition of fact
witnesses, timing of expert discovery, and the production of
documents and electronically stored information, 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.
To make clear that discovery shall not commence before the issuance of
the prehearing scheduling order's plan of discovery absent an express
agreement of the parties, the Commission is adding language to Section
3.31(a) stating that, not including the mandatory initial disclosures
required under paragraph (b) of the same Section, discovery demands
shall not commence before the issuance of the prehearing scheduling
order, unless the parties expressly agree otherwise.
In addition, the Commission is amending Section 3.31(c) to make
clear that the section's rules regarding the scope of discovery apply
to all discovery under Part 3 of the Rules of Practice. The Commission
also is amending language in this paragraph to make clear that the
section's overall limitations on discovery in paragraph (c)(2) and the
restriction on discovery of electronically stored information in
paragraph (c)(3) apply to discovery aimed at third parties, in addition
to the parties to the proceeding.
Section 3.31 App. A: Standard Protective Order.
The Commission is amending the Standard Protective Order at Section
3.31 App. A to make the following changes:
(1) Add the missing word ``information'' to the first sentence of
the first paragraph;
(2) more clearly define in the second paragraph the scope of the
confidentiality afforded to materials submitted by respondents or third
parties during an investigation or administrative proceeding by
referring, in addition to confidentiality protections provided by the
Federal Trade Commission Act, to protections provided by ``any other
federal statute or regulation'' and ``any federal court or Commission
precedent interpreting such statute or regulation'' rather than
referring to ``any regulation, interpretation, or precedent concerning
documents in the possession of the Commission'';
(3) more clearly state in the second paragraph that the Order's
confidentiality protection extends to any information that ``discloses
the substance of the contents of any confidential materials derived
from a document subject to this Order'' given that ``confidential
materials'' is defined in the Order's first paragraph, replacing the
current description of protection for ``information taken from any
portion of such document[s]'';
(4) add to the fifth paragraph a missing reference to ``Paragraph
1''; and
(5) clarify and make consistent language in the sixth paragraph
regarding documents with ``masked or otherwise redacted copies of
documents [that] may be produced'' by replacing ``deleted'' where used
with ``masked or redacted.''
Section 3.31A: Expert Discovery
The Commission is adding a new paragraph (e) to Section 3.31A
regarding materials that the parties cannot discover. This new
paragraph includes language from what was the last sentence of
paragraph (d), which will now state that ``[a] party may not discover
facts known or opinions held by an expert who has been retained or
specifically employed by another party in anticipation of litigation or
preparation for hearing and who is not listed as a witness for the
evidentiary hearing,'' and new language that is nearly identical to
language recently added to Federal Rule of Civil Procedure 26(b)(4)(B)
and (C), which specifically prohibits discovery of expert report drafts
and, with some exceptions, communications between a party's attorney
and its experts. Adding to the limitation of what was the last sentence
of paragraph (d), the new language taken largely from the Federal Rules
specifically provides that parties may not discover drafts of any
report required by Section 3.31A, regardless of the form in which the
draft is recorded. In addition, the new language prohibits parties from
discovering any communications, regardless of form, between another
party's attorney and any of its testifying expert witnesses, unless the
communication: (1) Relates to the expert's compensation for the study
or testimony; (2) identifies facts or data provided by the party's
attorney and considered by the expert in forming the opinions to be
expressed; or (3) identifies assumptions provided by the party's
attorney and relied on by the expert in forming the opinions to be
expressed.
In addition, the Commission is adding a new paragraph (f) to
Section 3.31A that allows the Administrative Law Judge, upon a finding
of good cause, to alter the pre-hearing schedule for expert discovery
set forth in Section 3.31A, but only if such an alteration would not
affect the date of the evidentiary hearing noticed in the complaint.
This change
[[Page 52251]]
allows the Administrative Law Judge to extend the expert discovery time
line if needed, including where the parties mutually seek such an
alteration, but would not change the overall time line for the
administrative adjudication itself.
Section 3.43: Evidence
The Commission is changing Section 3.43(b) to specifically include
expert reports as admissible hearsay evidence. In addition, the
Commission is adding a new requirement to this paragraph regarding the
admission of ``prior testimony (including expert reports) from other
proceedings where either the Commission or respondent did not
participate,'' though this requirement would not apply to ``other
proceedings where the Commission and at least one respondent did
participate.'' Such prior testimony could often be voluminous, and in
recent enforcement actions such evidence was admitted that resulted in
the inclusion of excessive, unhelpful materials in the record that
burdened the non-admitting party. As a result, for such material,
unless the parties consent to its admission, the Administrative Law
Judge must first make a finding upon the motion of the party seeking
the admission of such evidence that the prior testimony would not be
duplicative, would not present unnecessary hardship to a party or delay
to the proceedings, and would aid in the determination of the matter.
However, this requirement for ``prior testimony * * * from other
proceedings'' does not include the Commission staff's investigational
hearings involving respondent, which shall be admitted without being
subject to this new limitation.\3\
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\3\ See 16 CFR 2.8.
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Section 3.44: Record
The Commission is amending the general requirement that ``[t]he
live oral testimony of each witness * * * be video recorded
digitally.'' The Commission had added this requirement in its 2009
amendments to the Part 3 Rules ``to enable the Commission, which is
tasked with reviewing the record de novo, to independently assess
witness demeanor when necessary.'' \4\ However, recent experience and
cost estimates have revealed that this video requirement is expensive,
and the Commission has determined that the benefits of digital video
recordings to its assessment of witness testimony do not outweigh these
considerable costs.
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\4\ 74 FR 1817.
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Thus, the amendment allows for video recording of all witness
testimony only by direction of the Administrative Law Judge upon a
motion by a party. If the Administrative Law Judge issues an order
finding good cause to permit video recording of all witness testimony,
the moving party shall bear the costs for such recording. The rule
contemplates that the reporter officially designated by the Commission
to transcribe the proceeding shall also provide the video recording
services, in order to minimize delay or disruption and ensure
reliability. Where the moving party is not complaint counsel, the
moving party shall independently contract with and reimburse the
reporter directly for such additional recording services. The moving
party may retain some other person or entity to make the recordings,
such as when the designated reporter is unwilling or unable to perform
these additional services, only where the Administrative Law Judge
issues an order setting forth good cause for such substitution and
prescribing standards and procedures to ensure that the video recording
will serve as a complete and accurate record of the oral testimony
being recorded. The Commission's contract with its reporter sets forth
rates for obtaining copies of video recordings from the reporter. When
the moving party is other than complaint counsel, that party must
ensure that its contract with the reporter for video recording services
requires that copies of such recordings be made available at no more
than the maximum rates under the FTC's own contract, unless the
Administrative Law Judge has authorized a person or entity other than
the Commission's reporter to make the video recordings. In the case of
such an authorization by the Administrative Law Judge, the maximum
rates for copies shall be either the maximum rates that the
Commission's reporter is authorized to charge for such copies under its
Commission contract or the actual cost of duplication, whichever is
higher.
Section 3.45: In Camera Orders and Section 4.2: Requirements as to
Form, and Filing of Documents Other Than Correspondence
The Commission is amending the language in Sections 3.45 and 4.2
that requires parties to identify the confidential or public nature of
a document filed with the Commission on the document's first page. The
new language requires parties to provide this designation on every page
of the document to avoid the inadvertent release of individual pages of
confidential documents.
Section 3.52: Appeal From Initial Decision
The Commission is amending language in Sections 3.52(a)(1), (a)(2)
and (b)(2) that provides a deadline for holding oral argument. In these
paragraphs, the rule requires the Commission to ``schedule oral
argument'' within a prescribed amount of days after the deadline for
reply briefs or objections to the initial decision, depending on which
paragraph applies. To clarify that these sentences require oral
arguments to be held, and not merely scheduled for some later date,
within the prescribed amount of days, the Commission is replacing
``schedule'' with ``hold'' in these sentences.
In addition, the Commission is amending the beginning of these
sentences, which had set aside the deadlines for oral argument where
``the Commission determines there shall be no oral argument.'' Because
the paragraph permits the Commission to ``order'' that no oral argument
be held, the sentence now uses ``orders'' in place of ``determines'' to
make these sentences more consistent with the previous language.
Section 3.83: Procedures for Considering Applications
The Commission is correcting the citation to the Equal Access to
Justice Act in Section 3.83(i). That Section provided that ``[j]udicial
review of final Commission decisions on awards may be sought as
provided in 5 U.S.C. 503(c)(2).'' The paragraph now correctly cites to
5 U.S.C. 504(c)(2).
List of Subjects in 16 CFR Parts 3 and 4
Administrative practice and procedure.
For the reasons set forth in the preamble, the Federal Trade
Commission amends Title 16, Chapter 1, Subchapter A of the Code of
Federal Regulations, parts 3 and 4, as follows:
PART 3--RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS
0
1. The authority citation for part 3 continues to read as follows:
Authority: 15 U.S.C. 46, unless otherwise noted.
0
2. Amend Sec. 3.31, by adding a new sentence at the end of paragraph
(a) and revising the introductory text of paragraph (c) and paragraphs
(c)(2)(i), (c)(2)(iii), and the first two sentences of paragraph (c)(3)
to read as follows:
Sec. 3.31 General discovery provisions.
(a) * * * Unless all parties expressly agree otherwise, no
discovery shall take
[[Page 52252]]
place before the issuance of a prehearing scheduling order under Sec.
3.21(c), except for the mandatory initial disclosures required by
paragraph (b) of this section.
* * * * *
(c) Scope of discovery. Unless otherwise limited by order of the
Administrative Law Judge or the Commission in accordance with these
rules, the scope of discovery under all the rules in this part is as
follows:
* * * * *
(2) * * *
(i) The discovery sought from a party or third party is
unreasonably cumulative or duplicative, or is obtainable from some
other source that is more convenient, less burdensome, or less
expensive;
* * * * *
(iii) The burden and expense of the proposed discovery on a party
or third party outweigh its likely benefit.
(3) Electronically stored information. A party or third party need
not provide discovery of electronically stored information from sources
that the party or third party identifies as not reasonably accessible
because of undue burden or cost. On a motion to compel discovery, the
party or third party from whom discovery is sought must show that the
information is not reasonably accessible because of undue burden or
cost. * * *
* * * * *
0
3. In Appendix A to Sec. 3.31 revise the first sentence of paragraph
1, the first sentence of paragraph 2, paragraph 5, and the last
sentence of paragraph 6 to read as follows:
Appendix A to Sec. 3.31: Standard Protective Order
* * * * *
1. As used in this Order, ``confidential material'' shall refer
to any document or portion thereof that contains privileged
information, competitively sensitive information, or sensitive
personal information. * * *
2. Any document or portion thereof submitted by a respondent or
a third party during a Federal Trade Commission investigation or
during the course of this proceeding that is entitled to
confidentiality under the Federal Trade Commission Act, or any other
federal statute or regulation, or under any federal court or
Commission precedent interpreting such statute or regulation, as
well as any information that discloses the substance of the contents
of any confidential materials derived from a document subject to
this Order, shall be treated as confidential material for purposes
of this Order. * * *
* * * * *
5. A designation of confidentiality shall constitute a
representation in good faith and after careful determination that
the material is not reasonably believed to be already in the public
domain and that counsel believes the material so designated
constitutes confidential material as defined in Paragraph 1 of this
Order.
6. * * * Masked or otherwise redacted copies of documents may be
produced where the portions masked or redacted contain privileged
matter, provided that the copy produced shall indicate at the
appropriate point that portions have been masked or redacted and the
reasons therefor.
* * * * *
0
4. Amend Sec. 3.31A, by revising paragraph (d) and adding paragraphs
(e) and (f) to read as follows:
Sec. 3.31A Expert discovery.
* * * * *
(d) A party may depose any person who has been identified as an
expert whose opinions may be presented at trial. Unless otherwise
ordered by the Administrative Law Judge, a deposition of any expert
witness shall be conducted after the disclosure of a report prepared by
the witness in accordance with paragraph (a) of this section.
Depositions of expert witnesses shall be completed not later than 65
days after the close of fact discovery. Upon motion, the Administrative
Law Judge may order further discovery by other means, subject to such
restrictions as to scope as the Administrative Law Judge may deem
appropriate.
(e) A party may not discover facts known or opinions held by an
expert who has been retained or specifically employed by another party
in anticipation of litigation or preparation for hearing and who is not
listed as a witness for the evidentiary hearing. A party may not
discover drafts of any report required by this section, regardless of
the form in which the draft is recorded, or any communications between
another party's attorney and any of that other party's testifying
experts, regardless of the form of the communications, except to the
extent that the communications:
(1) Relate to compensation for the expert's study or testimony;
(2) Identify facts or data that the other party's attorney provided
and that the expert considered in forming the opinions to be expressed;
or
(3) Identify assumptions that the other party's attorney provided
and that the expert relied on in forming the opinions to be expressed.
(f) The Administrative Law Judge may, upon a finding of good cause,
alter the pre-hearing schedule set forth in this section; provided,
however, that no such alteration shall affect the date of the
evidentiary hearing noticed in the complaint.
0
5. Amend Sec. 3.43 by removing the sixth sentence of paragraph (b) and
adding, in its place, two sentences, to read as follows:
Sec. 3.43 Evidence.
* * * * *
(b) * * * If otherwise meeting the standards for admissibility
described in this paragraph, depositions, investigational hearings,
prior testimony in Commission or other proceedings, expert reports, and
any other form of hearsay, shall be admissible and shall not be
excluded solely on the ground that they are or contain hearsay.
However, absent the consent of the parties, before admitting prior
testimony (including expert reports) from other proceedings where
either the Commission or respondent did not participate, except for
other proceedings where the Commission and at least one respondent did
participate, the Administrative Law Judge must make a finding upon the
motion of a party seeking the admission of such evidence that the prior
testimony would not be duplicative, would not present unnecessary
hardship to a party or delay to the proceedings, and would aid in the
determination of the matter. * * *
* * * * *
0
6. Amend Sec. 3.44, by removing the last two sentences of paragraph
(a) and adding, in their place, five sentences, to read as follows:
Sec. 3.44 Record.
(a) * * * Upon a motion by any party, for good cause shown the
Administrative Law Judge may order that the live oral testimony of all
witnesses be video recorded digitally, at the expense of the moving
party, and in such cases the video recording and the written transcript
of the testimony shall be made part of the record. If a video recording
is so ordered, the moving party shall not pay or retain any person or
entity to perform such recording other than the reporter designated by
the Commission to transcribe the proceeding, except by order of the
Administrative Law Judge upon a finding of good cause. In any order
allowing for video recording by a person or entity other than the
Commission's designated reporter, the Administrative Law Judge shall
prescribe standards and procedures for the video recording to ensure
that it is a complete and accurate record of the witnesses' testimony.
Copies of the written transcript and video recording are available from
the reporter at rates not to exceed the maximum rates fixed by contract
between the Commission and the reporter. Copies of a video recording
[[Page 52253]]
made by a person or entity other than the reporter shall be available
at the same rates, or no more than the actual cost of duplication,
whichever is higher.
* * * * *
0
7. Amend Sec. 3.45, by revising the second and seventh full sentences
of paragraph (e) and the second and third full sentences of paragraph
(f) to read as follows:
Sec. 3.45 In camera orders.
* * * * *
(e) * * * A complete version shall be marked ``In Camera'' or
``Subject to Protective Order,'' as appropriate, on every page and
shall be filed with the Secretary and served by the party on the other
parties in accordance with the rules in this part. * * * An expurgated
version of the document, marked ``Public Record'' on every page and
omitting the in camera and confidential information and attachment that
appear in the complete version, shall be filed with the Secretary
within 5 days after the filing of the complete version, unless the
Administrative Law Judge or the Commission directs otherwise, and shall
be served by the party on the other parties in accordance with the
rules in this part. * * *
(f) * * * A complete version shall be marked ``In Camera'' or
``Subject to Protective Order,'' as appropriate, on every page and
shall be served upon the parties. The complete version will be placed
in the in camera record of the proceeding. An expurgated version, to be
filed within 5 days after the filing of the complete version, shall
omit the in camera and confidential information that appears in the
complete version, shall be marked ``Public Record'' on every page,
shall be served upon the parties, and shall be included in the public
record of the proceeding.***
* * * * *
0
8. Amend Sec. 3.52, by revising the fourth sentence of paragraph
(a)(1), the first sentence of paragraph (a)(2), and the fourth sentence
of paragraph (b)(2) to read as follows:
Sec. 3.52 Appeal from initial decision.
(a) * * *
(1) * * * Unless the Commission orders that there shall be no oral
argument, it will hold oral argument within 10 days after the deadline
for the filing of any reply briefs. * * *
(2) If no objections to the initial decision are filed, the
Commission may in its discretion hold oral argument within 10 days
after the deadline for the filing of objection, * * *
(b) * * *
(2) * * * Unless the Commission orders that there shall be no oral
argument, it will hold oral argument within 15 days after the deadline
for the filing of any reply briefs. * * *
* * * * *
0
9. Amend Sec. 3.83, by revising paragraph (i) to read as follows:
Sec. 3.83 Procedures for considering applicants.
* * * * *
(i) Judicial review. Judicial review of final Commission decisions
on awards may be sought as provided in 5 U.S.C. 504(c)(2).
* * * * *
PART 4--MISCELLANEOUS RULES
0
1. The authority for part 4 remains:
Authority: 15 U.S.C. 46, unless otherwise noted.
0
2. Amend Sec. 4.2(b), by revising the last sentence, to read as
follows:
Sec. 4.2 Requirements as to form, and filing of documents other than
correspondence.
* * * * *
(b) * * * Every page of each such document shall be clearly and
accurately labeled ``Public'', ``In Camera'' or ``Confidential''.
* * * * *
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2011-21019 Filed 8-19-11; 8:45 am]
BILLING CODE 6750-01-P