In July 1975, the world's largest meat company fired its vice president for retail sales development. The parting with Hughes A. Bagley was "less than amicable," says Iowa Beef Processors Inc., a $3 billion-a-year enterprise.
Rather than simply keep a stiff upper lip, Bagley departed IBP headquarters in Dakota City, Neb., with seven boxes of company papers. Some contained sensitive confidential data on costs and pricing as well as clamied trade secrets.
Now. unexpectedly, a constitutional struggle is looming between the power of Congress to obtain and disclose such papers and the power of the judiciary to issue protective orders to conceal them.
In St. Louis last Tuesday the 8th U.S. Circuit Court of Appeals heard argument on an IBP petition for an order to the House Committee on Small Business to yield still-secret copies of the so-called "Baglley documents."
If the order should be idsobeyed IBP says, the court should require committee Chariman Neal Smith (Dlowa), special counsel John M. Ftzgibons and investigator Nick Wultich to show cause why they shouldn't be held in contempt.
But Fitzigbbons told the court that it lacks jurisdiction either to require giving up of the papers or to threaten to hold the congressman and staff members in contempt. In addition, he said, the committee staff intends to introduce many of the documents -- which total about 3,000 pages -- when Rep. Smith, at a date still to be set, reopens hearings on economic barriers to meat marketing.
The 8th Circuit, which has said that the case "implicates dundamental concepts of legislative and judicial authority," is expected to rule this week. Whatever its reling, the case is expected to be appealed to the Supreme Court.
In a brief for IBP, Edward M. Rothe contended that a congressional committee has no right "to intrude in pending litigation to obtain documents covered by a protective order without any restrictions on... disclosure... "
Moreover, siad the Chicago attorney, "Unless the contempt power can be used by the courts even against members or officers of the other branches, the judicial branch will have lost its authority to resolve all federal legal disputes."
For the committee, however, Fitzgibbons argued that if IBP's view prevails, Congress' ability to investigate large corporations would be "irreparably impaired."
The basis of his argument: At any one time,a typical large corporation may be litigation dozens of cases. Routinely, judges grant protective orders to prevent improper idsclosures. If a congressional investigation should focus on the corporation, it could seek a protective order for possibly incriminating material. By the time the litigation progresses enough for the order to be lifted, the investigation could be over.
In an exchange of angry charges and countercharges:
Fitzgibbons alleged that the Bagley papers "show significant, deliberate and repected" civil and criminal antiturst violations that, if bared by the committee, "could result in additional civil lawsuits against IBP" and also in "possible felony criminal charges."
Rothe accused the committee of "a vicious" attack on IBP and of a "shocking lack of respect" for due process.
Fitzgibbons alleged that in a pending lawsuit against IBP and a defunct New York supermarket chain, IBP chairman and chief Xecutive officer J. Fred Haigler "appears to have recently perjured himself in denying the existence of the Bagley documents."
Rothe, denouncing the allegation as "gutter tactics," said that Haigler, "a man of impeccable integrity," was referring to entirely different papers.
At the time that Bagley removed the papers, which had crossed his desk in his four years as vice president, varous cattlemen had filed antitrust suits against certain packers, including IBP, and food chains.
Later, he gave copies to lawyers Lex Hawkins and John A. Cochrane, counsel for one of the plaintiffs. Last February, the committee issued a subpoena to Hawkins for the papers, which were under a protective order issued by U.S. District Court Judge William M. Taylor in Dallas. But he refused to lift it.
In Des Moines, meanwhile, IBP filed a suit accusing Bagley and the two lawyers of having conspired in the wrongful disclosure of confidential business information.A protective order similar to Taylor's then was issued by Chief U.S. Dstrict Court Judge Edward J. McManus.
Seeing a new opportunity to get the papers, the committee issued a subpoena for them to Bagley himself. Apparently anxious to comply, he asked McManus to modify his protective order.
On Friday, Nov. 24, Fitzgibbons, who had been making daily phond checks to find out if the judge had acted, learned that McManus had issued a new order enabling Bagley to comply with the subpoena.
The following Monday marning, committee investigator Wultich arrived at the Sioux City, Iowa, office of Bagleyhs lawyer, took the seven boxes of documents back to Washington, had them copied, returned the originals and kept the copies.
Rothe Knew nothing of this unitl the next day, when a copy of the judge's new order arrived in the mail. He sought a stay, but the 8th Circuit, relying on committee assurances that the papers wouldn't be disclosed until Congress convened, denied it Dec. 14.