United States v. National Steel Corp.

26 F.R.D. 599, 4 Fed. R. Serv. 2d 506, 1960 U.S. Dist. LEXIS 4818, 1961 Trade Cas. (CCH) 69,912
CourtDistrict Court, S.D. Texas
DecidedOctober 21, 1960
DocketCiv. A. No. 13032
StatusPublished
Cited by7 cases

This text of 26 F.R.D. 599 (United States v. National Steel Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. National Steel Corp., 26 F.R.D. 599, 4 Fed. R. Serv. 2d 506, 1960 U.S. Dist. LEXIS 4818, 1961 Trade Cas. (CCH) 69,912 (S.D. Tex. 1960).

Opinion

INGRAHAM, District Judge.

' Interrogatories (68 in number) have been filed under Fed.Rule Civ.Proc. 33, 28 U.S.C.A., by plaintiff, and defendants have filed objections thereto.

At the outset of these interrogatories plaintiff requests defendants to:

“State separately with respect to each of the following interrogatories the name, address, and position or title of each person furnishing the answer thereto.”

Corporate defendants argue that plaintiff is not entitled to know the persons connected with the preparation of the answers to the interrogatories. Plaintiff attempts to justify the query on these grounds: ■ (1) the request is squarely within these words of Fed.Rule Civ.Proc. 26(b), “including * * * the identity and location of persons having knowledge of relevant facts”; (2) the question will aid plaintiff in determination of accuracy of defendants’ answers generally; and (3) identity of informants will lead to further discovery by depositions.

Corporate defendants’ objections to this general question should be sustained. The two cases found on the point are to this effect. Hopkinson Theatre v. RKO Radio Pictures, D.C.S.D.N.Y.1956, 18 F.R.D. 379 at page 383, found “no justification for the question”. In Maple Drive-In Theatre v. RKO, D.C.S.D.N.Y.1956, 23 Federal Rules Service 33.321, Case 2, the court denied such a request. It said in 23 Fed.Rules Serv. 33.354, “There is no right in the plaintiff to know the persons connected in any way with the preparation of the answers to the interrogatories.” The objections are well taken for another reason. Many of the interrogatories call for a great mass of detail and statistics. Such information must be gotten from innumerable people in various places. Hence, an answer to the question would be extremely burdensome upon corporate defendants.

Defendants object further to Interrogatories Nos. 10, 11, 31, 33 and 63. Nos. 10 and 11 will be considered together, for both deal with net income of defendants; Nos. 31 and 33 will be discussed together, for each deals with relations between defendants National Steel Corporation and Stran-Steel Corporation; and Interrogatory No. 63 will be separately decided. Fed.Rule Civ. Proc. 26(b) says that interrogatories are proper “ * * * regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action * * It is familiar law that this rule must be given a broad, liberal interpretation to effectuate the remedial purposes of the Federal Rules of Civil Procedure. 2 Barron & Ploltzoff, Federal Practice and Procedure, Sec: 766 (1950); B. & S. Drilling Co. v. Halli[601]*601burton Oil Well Cementing Co., D.C.S.D.Tex.1959, 24 F.R.D. 1.

A brief recitation of the facts and positions of parties is necessary to appreciate the problems raised by these challenged interrogatories. Defendants are charged with violation of 15 U.S.C.A. § 18 (Section 7 of the Clayton Act). The corporate defendants, whose objections are here in issue, are three in number: National Steel Corporation (hereinafter labelled “National”); Stran-Steel Corporation (hereinafter labelled “Stran-Steel”) and Metallic Building Company (hereinafter labelled “Metallic”). Defendant National is a fully integrated steel producer and is a sizeable producer of steel sheets, a principal raw material in prefabricated metal buildings. Stran-Steel, a manufacturer of prefabricated metal buildings, is a wholly-owned subsidiary of Great Lakes Steel Corporation which is in turn a wholly-owned subsidiary of National. Metallic is engaged in the manufacture of prefabricated metal buildings at its plant in Houston, Texas. By an agreement dated December 12, 1958, the individual defendants in this case, Metallic’s sole stockholders, agreed to sell to National seventy-five per cent of Metallic’s outstanding stock. Metallic is currently operated as a controlled subsidiary of Stran-Steel. This transaction is attacked by the government as violative of 15 U.S.C.A. § 18. Plaintiff alleges that the effect of the aforesaid stock acquisition may be substantially to lessen competition or tend to create a monopoly in the production and sale of prefabricated metal buildings in contravention of Section 7 of the Clayton Act.

Corporate defendants object to Interrogatories Nos. 10 and 11 which réad as follows:

“10. State the net income, before . : income taxes, of Metallic for each ' of. the years 1955 through 1959.
“il. State the net income, before ' income' taxes, of Stran-Steel' for each of the years 1955 through 1959.”

Both Metallic and Stran-Steel state that their net incomes are confidential and business secrets. Both defendants deny the relevancy of these two queries. It is said in a note in 28 Va.L.Rev. 338 (1942), “There can usually be no necessity for inquiring into the * * * net income * * * of a party. Only special circumstances * * * justify such interrogatories.” In the opinion of the court, defendants’ objections to said interrogatories should ■ be denied. I am of the opinion that the answers called for are relevant to the issues in the' case. Before and after acquisition net income or loss record of Metallic and,Stran-Steel is pertinent to the question of whether the two companies have been used as “fighting ships” to capture the market through the device of selling at unreasonably, low rates.

Defendants’ desire to keep confidential these figures is appreciated by the court. Hence, pursuant to the provisions of Fed.Rule Civ.Proc. 30(b),- the answers to Interrogatories Nos. 10 and 11 are to be furnished only to plaintiff. The copies filed with the court are to be kept under seal and not made public except upon the order of the court. This protective order should allay the dangers cited in 28 Va.L.Rev. 338 (1942).

Corporate defendants next object to Interrogatories Nos. 31 and 33. These read as follows:

“31. State whether National or any of its subsidiaries has ever contributed, loaned, or advanced any money or other assets to Stran-Steel and, if so, state (a) the date, (b) the amount involved, and (c) the purpose of each such contribution, loan or advance.”
******
“33. State the nature, extent, and degree of frequency of all services which National of any of its subsidiaries performs for' Stran-Steel but does not perform for pre[602]*602fabricated metal building manufacturers not affiliated with National.”

Corporate defendants’ objection to these two queries is on the ground of relevancy. Defendants think them irrelevant, for the only issue said to be presented in the case is whether Stran-Steel violated Section 7 of the Clayton Act by acquiring a stock interest in Metallic. Defendants say plaintiff does not challenge the legality of National’s ownership of Stran-Steel. Following this reasoning defendants say they will answer only the relevant question of what money or services Stran-Steel furnished Metallic, not what National did for Stran-Steel.

The court is unable to agree with defendants on the relevancy of Interrogatories Nos. 31 and 33. Therefore, defendants’ objections to these two interrogatories should be denied. Plaintiff believes two of the competitive advantages which Stran-Steel enjoys over independent manufacturers of prefabricated metal buildings are the availability of financial assistance and useful services from National.

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Bluebook (online)
26 F.R.D. 599, 4 Fed. R. Serv. 2d 506, 1960 U.S. Dist. LEXIS 4818, 1961 Trade Cas. (CCH) 69,912, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-national-steel-corp-txsd-1960.