disparaged, the court should not readily sanction the use of the Act as a tool to tip the strategic balance of an administrative proceeding when the party seeking disclosure is engaged in litigation over the policy which is the subject matter of the records requested under FOIA. In this context, the claim of interference to the Commission's trial strategy should carry some weight. If the requesting party were a member of the public other than the object of the investigation that will result in enforcement proceedings, then the burden on the Government could be more extensive, requiring a demonstration that the investigation actually will culminate in an adversary proceeding, and that premature disclosure would cause some positive harm to the government's case, other than the loss of relative strategic advantage in the interrogation of the complainant's own witnesses.

Gifford-Hill already has obtained through the administrative discovery process a list of the witnesses the Commission proposes to call and documentary exhibits it proposes to introduce. By GiffordHill's own representation, it will receive copies of the transcripts in question prior to the testimony of each witness concerned. This should provide Gifford-Hill with adequate opportunity for effective confrontation and cross-examination. To grant the plaintiff earlier access to the transcripts under FOIA would undermine the Commission's obviously fair discovery process, and to allow a private litigant, who is the object of a complaint before the Commission, to gain adversary advantage by means of this action simply would not fulfill the interests of informing the public contemplated by the Act. In this light the Commission's justification is sufficient.

The subpoenas duces tecum at page 67 of the Index, should be disclosed, with deletion of the names and addresses of confidential sources because the Commission has properly asserted Exemption 7D (protection of confidential sources) only to the extent of the material ordered to be deleted, and has offered no specific justification to warrant non-disclosure under Exemption 7A. In its review of the Commission's Supplemental Justification, the court can find no attempt to demonstrate how release of the subpoenas with deletions will interfere with the proceedings before the Administrative Law Judge scheduled for July, 1976. Thus, the Commission has not met its burden under Exemption 7A, nor has it specifically demonstrated that further deletions are required, and the records must be disclosed.

The records at pages 65 through 74 of the Index for which the Commission asserts Exemption 5 are nondisclosable under that exemption. The Index provides adequate information to the court that the internal memoranda contain discussion of a wide range of policies and decisions in their incubation stage. In camera inspection for possible deletions is not called for because the discursive nature of the

memoranda renders the segregability of the documents so unlikely that the Index should be deemed sufficient for this purpose. The records listed at page 76 also are exempt for this reason.

The remaining documents at page 74 and the documents at page 75 of the Index are exempt under Exemption 7A. Together with the information supplied in the Index, the Commission has supplied a sufficient basis to find that their release would interfere with the pending enforcement proceeding against Gifford-Hill.

The Commission asserts Exemption 4 for certain documents at pages 77 through 79 of the Index, and for all documents at pages 84 through 86. While the Commission has supplied a fairly detailed description of each type of document, it has failed to meet the burden of justification set forth in Pacific Architects & Engineers v. Renegotiation Board, 505 F. 2d 383 (D. C. Cir. 1974). As stated in that case a "detailed justification" should include

(a) the extent to which data of the sort in dispute is customarily disclosed to the public, with specific factual or evidentiary material to support the conclusion reached; (b) the extent to which disclosure will impair the government's ability to obtain necessary information of this type in the future, with specific factual or evidentiary material to support the conclusion reached; (c) the extent to which disclosure of the information will cause substantial harm to the competitive position of the person from whom the information was obtained; with specific factual or evidentiary material to support the conclusion reached; and (d) the extent to which any of the harms of the type mentioned in (b) and (c) could be reduced or eliminated by non-disclosure of the identity of the person submitting the information in dispute. Id. at 385.

The court cannot properly review the issues presented under Exemption 4 without this information. As to the documents at pages 84 through 86 of the Index, the Commission has demonstrated an attempt to sever out certain information and disclose the remainder. However, there is no indication, and certainly not "specific factual or evidentiary material" bearing on the extent to which this type of information is disclosed to the public, or the competitive harm that would be inflicted by release of certain of the records. Without this information, the court cannot effectively rule upon the propriety of exempting the records from disclosure. For the records from pages 77 through 79, the Commission's supplemental justification does provide some indication of the competitive harm that smaller competitors within the cement industry would suffer by disclosure, but the statements are conclusory, not containing the detail required by the standard of Pacific Architects.

These documents for which the Commission asserts Exemption 4 also are to be submitted in camera. If the court finds that the justification for non-disclosure is insufficient, it will inspect the documents to

determine whether release in full or release with deletions to protect confidential sources under Exemption 7D is appropriate.

Items 7 and 8 at page 79 of the Index are to be submitted for in camera inspection. Only Exemption 7D has been asserted, and the Commission has not made an adequate effort to demonstrate why the documents could not be released with deletions. As to these documents, the Commission should submit a further supplemental justification to support total non-disclosure. Items 1 and 2 at page 77 and Item 6 at page 78 were not considered to fall into the same category as Items 7 and 8 at page 79 because in its supplemental justification the Commission argued that release would cause interference with enforcement proceedings pursuant to Exemption 7A. Although this exemption is not specified in the Index, the information set forth in the Index describing each set of documents, and the contention by the Commission in its supplemental justification relating to the inhibiting effect of disclosure upon the sources is sufficient to warrant nondisclosure.

Item 1 at page 80 is to be disclosed. The only exemption originally relied upon by the Commission was Exemption 7C. Since the Commission abandoned its reliance on this exemption in its supplemental justification, there is no longer any reason to prevent disclosure. Finally, upon inspection of the documents that were submitted in camera, it became apparent that documents 12,1; 14,6; 18,5; and 27,7 were not submitted. The Commission should attempt to retrieve these documents for inspection by the court.

UNITED STATES OF AMERICA v. AMREP
CORPORATION et al.*

No. 75 Cr. 1023 (CMM).

F.T.C. Docket No. 9018.

(United States District Court, Southern District of New York, January 15, 1976)

1. PREVENTING INTERFERENCE WITH DEFENDANTS' PREPARATION AND PENDING CRIMINAL TRIAL WAS WITHIN COURT'S JURISDICTION DESPITE ITS LACK OR JURISDICTION TO INTERFERE WITH F.T.C. PROCEEDINGS. As against contention that district court lacked jurisdiction to interfere with proceedings of Federal Trade Commission, court did have jurisdiction to prevent interference with trial of pending indictment with preparation by defendants for such trial.

2. ADMINISTRATIVE REMEDIES HAD BEEN EXHAUSTED WHERE F.T.C., KNOWING OF CRIMINAL INVESTIGATION, HAD DENIED STAY OF PROCEEDINGS.

Where full Federal Trade Commission had denied stay of proceedings knowing of criminal investigation then in progress, there was exhaustion of administrative remedies.

3. COMPLIANCE WITH A.L.J. ORDER WAS UNNECESSARY BEFORE SEEKING A FEDERAL DISTRICT COURT STAY, WHERE DEFENDANTS HAD PETITIONED A.L.J. FOR STAY TO PREVENT DISCOVERY PROCEEDINGS AND HE WOULD NOT RULE PRIOR TO COMMENCEMENT OF DOCUMENT PRODUCTION.

Where it was to prevent commencement of discovery proceedings that application to administrative law judge for stay was initiated, and he indicated he would not rule at least until production of documents had commenced, movant was not required to comply with order of administrative law judge before seeking stay from federal district court.

4. IN SEEKING STAY OF ADMINSTRATIVE PROCEEDINGS, BURDEN OF SHOWING THAT SCHEDULE OF F.T.C. PROCEEDINGS WOULD INTERFERE WITH DEFENSE PREPARATION OR TRIAL OF INDICTMENT RESTED WITH

DEFENDANTS.

[1094] Defendant in criminal prosecution, seeking stay of administrative proceedings, had burden of making sufficient showing that schedule of proceeding before Federal Trade Commission would interfere with trial of indictment or preparation of defense.

5. F.T.C. PROCEEDINGS WOULD BE STAYED UNTIL ONE MONTH FOLLOWING ENTRY OF JURY VERDICT IN CRIMINAL TRIAL TO ENABLE DEFENDANTS TO PREPARE THEIR DEFENSE.

To enable defendants to prepare defense for criminal trial schedule to start October 5, civil proceedings before Federal Trade Commission would be stayed after July 30, 1976, until one month after entry of jury's verdict in criminal trial.

(Syllabus, with substituted captions, taken from 405 F.Supp.

1053)

In petition for stay of F.T.C. proceedings, court held that after July 30, 1976, civil proceedings would be stayed until one month following entry of jury's verdict in the criminal trial scheduled for October 5, so as to allow defendants to prepare their defense.

Civil proceedings stayed accordingly.

Thomas J. Cahill, U.S. Atty., Southern District of New York, New York City, for the United States; Naomi Reice Buchwald, Asst. U.S. Atty., New York City, of counsel.

Proskauer, Rose, Goetz & Mendelsohn, New York City, for defendant Amrep Corporation; Morton M. Maneker, New York City, of counsel. Before METZNER, District Judge.

[1054] Amrep Corporation (Amrep), a defendant in this criminal proceeding, moves for a stay of all proceedings presently pending against it before the Federal Trade Commission (the Commission).

The indictment names seven individual and three corporate defendants and charges, in essence, a conspiracy to defraud purchasers of lots in Rio Rancho Estates in an amount exceeding $200,000,000. It consists of 42 pages alleging 70 violations of the mail fraud statute (18 U.S.C. § 1341), and ten counts of violation of the Interstate Land Sales Full Disclosure Act (15 U.S.C. § 1703).

Amrep is also the subject of a complaint filed by the Commission based on the same and similar acts. The Commission commenced its investigation in April 1973. In March 1975 it issued a complaint against Amrep seeking extensive relief in the form of a detailed cease and desist order and contemplating massive restitution to allegedly defrauded purchasers.

In March 1974 the United States Attorney instituted a grand jury investigation and the instant indictment was filed on October 28, 1975, to which all the defendants pleaded not guilty on November 10, 1975.

Between the issuance of the Commission's complaint and the filing of the indictment, the Commission had been proceeding with discovery of Amrep. On October 30, two days after the filing of the indictment, a conference was held with the administrative law judge for the purpose of setting a trial schedule of the Commission's complaint. Although the administrative law judge was informed of the filing of the indictment, he proceeded to schedule, by order dated October 31, the following pretrial and trial proceedings: (1) By November 28, Amrep was to have supplied the Commission with additional document production in order to fully comply with a government subpoena duces tecum. (2) The Commission's case-in-chief was to begin February 17, 1976. (It was adduced at the hearing of October 30 that the Commission's case would