Borden Company v. Penrose Industries Court Opinion

    843

-■ ■ m

.. upon the 
. enacted after suit was begun 

*-*; » * made no exception for
litigation, but purported-to be 

r',l and so to take away the 
nc'tion that for a time had been 

V m .d upon the courts of the Unit­
; tps * * * [The statute]
U ay no substantive right, but 

"  v' changes the tribunal that is to 
: the case. In doing so it evinces 
v,nge of policy, and an opinion that 

‘ "r,?hts of the Indians can be better 
rved by the quasi paternal super- 

of the general head of Indian 
rs The consideration applies 

* ,he same force to all cases, and 
embodied in a statute that no 

was intended to apply to all, 
- far as construction is concerned.
. , Court in Bowles v. Strickland, su-

BORDEN COMPANY v. SYLK
C ite as 410 F.2d S-13 (IWifO. . -

reasoning that which conviction for refusal to be mduct- 
ed was imposed by Judge Boldt ,n a clear 
and instructive opinion, based upon rea­
soning to which we subscribe, and con­
cluding that no registrant had a vested 
right in the “auxiliary service” of a De­
partment of Justice inquiry and hearing 
so as to survive the 1967 amendment to 
§ 6(j). The Act must be and is so
construed. ’ _

The judgment of the lower court is 
affirmed.

held that the action of the Price
- Mstrator in wrongly instituting 

under the Emergency Price Control 
,{ 1942, 50 U.S.C.App. § 901, et seq., 
ut first obtaining requisite ap­

i! of the Secretary of Agriculture 
,s i-ured by an amendment eliminating 

requirement, which was enacted ciur- 
. f the pendency of the appeal to this 

-* It was said: “As this amend- 
did not affect substantive rights, 

related only to the procedural ma- 
<-ry provided to enforce such rights, 

»; plied to pending as well as to future 
« See 50 American Jurisprudence, 

Mfe 5**5, Section 482. A suit in process
•t * * *

* '' 1
*1

'lief 'JO F.Supp. 422 (W .W ash.1968), in

The BORDEN COMPANY

William SYLK and Harry S. Sylk

v.

PENROSE INDUSTRIES 
CORPORATION

Sylvan Seal Milk, Inc., Appellant. 

No. 17592.

United States Court of Appeals 
Third Circuit.

is a pending suit.”
vrrett v. United States, 216 F.2d 

3 Cir. 1954), relied upon by appel­
' n not applicable to the issue raised 

i appeal. In that case the Court 
a change in Selective Service 

..slums to deny a Department of 
hearing in certain classes of con- 

■" ">us objector cases was unaiithor- 
• and contrary to, § 6(j) of the 

tatute, and it was not concerned 
a change in the statute itself. 

- "vctly in point is the holding of the 
' ’ Court in United States v, Haugh-

Argued March 28, 1969. 

Decided May 13, 1969.

The United States District Court 
for the Eastern District of Pennsylvania, 
Joseph S. Lord, III, J., 289 F.Supp. 847, 
directed plaintiff to answer certain ques­
tions propounded at deposition and plain­
tiff appealed. The Court of Appeals, Al- 
disert, Circuit Judge, held that where op­
position to discovery order was based on 
ground that information sought was not 
relevant to issues raised in litigation, or-

j

f

*
i

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• i . , .  ..............................' . . .  . - IS.V • . '■ SS....  ■ ■■■■■■ • ■-  . .  ‘ . . . . . .



410 FEDERAL REPORTER, 2d SERIES844
der compelling plaintiff to answer ques­
tions propounded to it by third-party de­
fendant which cross-claimed against 
plaintiff was not an appealable order. 

Dismissed.

1. Federal Civil Procedure ©=1267
Scope and conduct of discovery are 

within sound discretion of trial court.

2. Courts ©=>405(12.13)
Orders compelling or denying dis­

covery are generally interlocutory. 28 
U.S.C.A. §§ 1291, 1292.

3. Courts ©=>405(3.8) f
Where opposition to discovery order 

was based on ground that information 
sought was not relevant to issues Raised 
in litigation, order compelling plaintiff 
to answer questions propounded to it by 
third-party defendant which cross-claim­
ed against plaintiff was not an appeal­
able order. Clayton Act, §§ 2, 3 as 
amended by Robinson-Patman Price Dis­
crimination Act, 15 U.S.C.A. §§ 13, 14; 
28 U.S.C.A. § 1291.

■ I ;
l. -I

4. Courts ©=405(3.8)
Where order compelling plaintiff to 

answer questions propounded to it by 
third-party defendant which asserted 
cross claim against plaintiff prohibited 
publication or disclosure of such infor­
mation, order was not rendered appeal­
able on basis of potential harmful impact 
on plaintiff’s competitive status. Clay­
ton Act, §§ 2, 3 as amended by Robinson- 
Patman Price Discrimination Act, 15 
U.S.C.A. §§ 13, 14; 28 U.S.C.A. § 1291.

Israel Packel, Fox, Rothschild, O’Brien 
& Frankel, Philadelphia, Pa., for appel­
lant.

John D. Egnal, Egnal, Simons & Eg- 
nal, Michael H. Egnal, Philadelphia, Pa., 
for appellees.

Before- SEITZ, ALDISERT ,v ; 
STAHL, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Circuit Judge.
This is an appeal from a discovery * • 

der of the district court compelling 
disclosure of certain business inform* 
tion by a non-party witness 289 F.Su; - 
847. Suit was brought in the court !-■ 
low by the Borden Company against \v 
liam and Harry Sylk as the endorsers «{ 
certain outstanding promissory not** 
The maker of the notes, Penrose Indu»- 
tries Corporation, was joined as a thirl 
party defendant.

Penrose filed cross-claims against R r 
den alleging breach of contract and vi. u 
tions of federal anti-trust laws. Specifi­
cally, Penrose asserted that: (1) Bnr>i*s 
breached its agreement to sell ice cr<ir~, 
to Penrose at a price equal to the !o». »s 
retail-outlet price charged by Boni- n. 
and (2) Borden’s use of its wholly-ou r-.**s 
subsidiary Sylvan Seal Milk, Inc. in At­
tributing its products was in violated 
of the Robinson-Patman Act, 15 U.S* 
§§ 13 and 14.

When Borden’s motion to dismiss tb* 
cross-claims was denied by the In**-* 
court, Penrose moved to depose ceru 
corporate officers of Borden and Syl j * 
in an attempt to discover the specific* -■ 
the Borden-Sylvan distributive arr.e 
ment. In the course of depositions, 
van’s president refused to answer o :*.> 
inquiries into the volume and i f_ ’ 
charged by Sylvan to its customers. . *•' 
ostensible reason for his refusal wa-> ’ * 
publication of such confidential iru- > * 
tion would seriously prejudice » ‘»*** * 
competitive standing.

Penrose then moved to com:-- *’ 
swers. Upon a finding that the itn 4 
tion sought could be considered r> - 
to the litigation, the district court » * ^ 
ed the motion. To insulate 
against serious competitive dan' -* 1
least at the pretrial stage, the i  ̂ ^
rected that “no such information - 
disclosed to the public or to ar.„>



9mî ^tmiiM

BORDEN COMPANY v. SYLK
CU.! as 410 *\2<1 Sl.'i ri:- n .

845

the plaintiff. Sylvan has ap- orders bespeak their own interlocutory

f*+i'd.

, It is a well-established princi- 
- *,!*at the scope and conduct of discov- 
", are within the sound discretion of 

{riaI court. It is equally well estab- 
,V« ,t that such orders compelling or de- 

, 4’nk. discovery are generally interlocu- 
, f v Since the enactment of the Judici- 
jri Act of 1789, the Congress has con­
, ../ntly directed that the jurisdiction of 
<**■ courts of appeals should extend only 
, decisions of the district courts which 
4W final. 28 U.S.C.A. § 1291. Only cer­
tain specifically enumerated orders 
«hich would otherwise be considered in- 
•xrl.icutory, contained in Section 1292 
f Title 28, nor 
, rc, are appealable.
In considering the Congressional di- 

feetive as it relates to our appellate ju­
risdiction, Chief Judge Hastie has em­
; hasized its “jurisprudential significance 
Uyond mere technicality. It is an au­
thoritative application and implementa- 
Skm of a basic and persisting policy 
arainst piecemeal appeals.” Panichella 
v Pcnna. R. Co., 252 F.2d 452, 454 
(hr. 1958).

nmation of what 
<>cisions are final may sometimes be 
difficult. Recognizing this, the Supreme 
Court has indicated that “the require­
ment of finality is to be given a ‘practi­
cal rather than a technical construc­
tion.' ” Gillespie v. United States Steel 
Corp., 379 U.S. 148, 153, 85 S.Ct. 308, 
Ul. 13 L.Ed.2d 199 (1964). The Court 

suggests that the most important 
considerations in deciding the issue of 
'•aality are “the inconvenience and costs 

piecemeal review on the one hand 
»**1 the danger of denying justice by de- 
*») on the other.” Dickinson v. Petrole- 
sen Conversion Corp., 338 U.S. 507, 511, 

S.Ct. 322, 324, 94 L.Ed. 299 (1950).

! bse questions of finality are not ordi- 
*»r;!y presented where, as here, the ap- 

from an order compelling or deny­
* discovery. This is so because such

orders bes
character. They are necessarily only a 
stage in the litigation and almost invari­
ably involve no determination of the sub­
stantive rights involved in the action. 
For example, in Apex Hosiery Co. v. 
Leader, 102 F.2d 702, 703 (3 Cir. 1939), 
an action for treble damages under the 
Sherman Anti-Trust Act, this court ruled 
that an order compelling the discovery 
and production of business documents 
was interlocutory and not appealable. 
Citing the observations of Mr. Justice 
Brandeis in Cogen v. United States, 278 
U.S. 221, 223, 49 S.Ct. 118, 119, 73 L.Ed. 
275 (1928), it was noted that:

“The disposition made of the motion 
will necessarily determine the conduct 
of the trial and may vitally affect the 

^result. In essence, the motion resem- 
others made before or during a 

triHito secure or to suppress evidence, 
such as applications to suppress a dep­
osition! to compel the production of 
books Ir documents, for leave to make 
physigfa examination of a plaintiff, or 
for ^subpoena duces tecum. The or­
ders made upon such applications, so 

as they affect the rights only of 
parties to the litigation, are interlocu­
tory.” (Citations omitted.)
While recognizing the validity of this 

general rule of non-appealability, appel­
lant seems to argue that we should not 
invoke it because the appellant is not a 
party to the litigation. It suggests that 
because of its non-party status, the dis­
trict’s order compelling it to disclose 
certain business information is a matter 
“collateral” to the litigation and there­
fore appealable under the rule of Cohen 
v. Beneficial Industrial Loan Corp., 337 
U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 
(1949). The Supreme Court in Cohen 
held that an order requiring the deposit 
of security as a prerequisite to the main­
tenance of a stockholder’s derivative suit 
was final and appealable.

We have detected what appears to be 
an irresistible impulse on the part of ap­
pellants to invoke the “collateral order” 
doctrine whenever the question of ap-

< u ‘- ■ v  •!



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■I -iHi<-:iir'ijii'-ii.liVni'llii-ii"'iiiii°i I-

410 FEDERAL REPORTER, 2d SERIES

pealability arises. Were we to accept 
even a small percentage of these some­
time exotic invocations, this court would 
undoubtedly find itself reviewing more 
“collateral” than “final” orders.

[3] The Cohen rule is readily distin­
guishable from the present issue. There, 
the appellate courts were confronted 
with a question of law which was totally 
independent of the issue involved in the 
litigation; and the resolution of the 
question—whether a deposit of security 
was required for the plaintiffs to go for­
ward with the litigation—could be made 
without any reference to the substance 
of the action. This is in sharp contrast 
to the present case where the appellant 
bases its entire opposition to the discov­
ery order on the grounds that the infor­
mation sought is not relevant to the is­
sues raised in the litigation. Th.ej argu­
ment itself betrays the essentially non­
collateral nature of the question, for if 
the propriety of the lower court’s order 
can be determined only by making refer­
ence to the substantive litigation, then 
clearly it is not a “collateral” matter 
within the Cohen meaning.

-4] The appellant’s claim that the or­
e • should be viewed as appealable be- 
ause of the potentially harmful impact 
n its competitive status is also without 
nerit. First, the argument ignores the 
irotective provisions of the order pro- 
libiting publication of disclosure outside 
he litigation. Moreover, it presumes 
hat the possibility of pecuniary injury 
done is sufficient to justify appellate 
•eview.

A similar argument was advanced in 
United States v. Fried, 386 F.2d 691 (2 
Cir. 1967), where a non-party witness 
sought appellate review of an order re­
quiring his presence for testimony on the 
grounds that attendance could seriously 
jeopardize his health. In that case, as 
here, the appellant relied heavily on the

holding in Covey Oil Co. v. Continenui 
Oil Co., 340 F.2d 993 (10 Cir. 
which permitted an appeal by a n - 
party witness served with a subpoena 
requiring the disclosure of trade seen vs 
After reviewing the holding in (’<• try 
the court in Fried rejected the a;.;- y 
choosing instead to follow the rule ..? 
Alexander v. United States, 201 L.S. 1ST. 
26 S.Ct. 356, 50 L.Ed. 686 (1906) which 
held that; “a judge’s order directing » 
witness to answer a question in the very 
action pending lacks the finality r<- 
quired to support an appeal by the wit­
ness until he decides to risk citation f-r 
contempt and a contempt order is made “ 
386 F.2d at 694. We perceive no reav r. 
why the present case should not be gov­
erned by the same rule.

Every interlocutory order involves, to 
some degree, a potential loss. That risk, 
however, must be balanced against the 
need for efficient federal judicial ad­
ministration as evidenced by the C-<r. 
gressional prohibition of piecemc.il .<r 
pellate litigation. To accept the apt*', 
lant’s view is to invite the inundation <i 
appellate dockets with what have here­
tofore been regarded as nonappealab**

. matters. It would constitute the court* 
of appeals as second-stage motion court* 
reviewing pretrial applications of - 
non-party witnesses alleging some dam 
age because of the litigation.

To accept the appellant’s view is «•' 
to invite a geometrical increase in  ̂
already unacceptable delay between - 
date of filing and trial in the no 
politan district courts. The p l ­
ease, filed over three years ago a 
now held in abeyance pending the - 
come of this appeal, is a splenmu • 
ample of the Homeric proportions - 
such litigation can assume. Our 
burdened courts have little time or - 
petite for such protractions.

The appeal will be dismissed b,r 
of jurisdiction.