Federal Trade Commission v. B. F. Goodrich Co.

242 F.2d 31

• Court: Court of Appeals for the D.C. Circuit
• Decided: February 28, 1957
• Docket: Nos. 13070-13109
• Status: Published

Opinion

WILBUR K. MILLER, Circuit Judge.

In these actions, certain tire manufacturers and dealers asked the United States District Court for the District of Columbia to declare invalid and en-join the enforcement of the Federal Trade Commission s Quantity-Limit Rule 203-1, which is as follows:

“The quantity limit as to replacement tires and tubes made of natural or synthetic rubber for use on motor vehicles as a class of commodity is twenty thousand (20,-000) pounds ordered at one time for delivery at one time.”

The Commission promulgated the Rule purportedly pursuant to authority conferred upon it by § 2(a) of the Clayton Act, as amended by the Robinson-Pat-man Act.¹ This section provides that “the Federal Trade Commission may * * * fix and establish quantity limits * * * as to particular commodities or classes of commodities, where it finds that available purchasers in greater quantities are so few as to render differentials on account thereof unjustly discriminatory or promotive of monopoly in any line of commerce * * *.”

The District Court dismissed the complaints for lack of jurisdiction and also for failure to state a claim upon which relief could be granted. On appeal we held to the contrary on both grounds, reversed the order of dismissal, and remanded the cases to the District Court.² Then that court, after considering cross motions for summary judgment, granted the motion of the plaintiff manufacturers and dealers, holding that “the statutory finding expressly required by the Act of Congress as a basis for the order has not been made and that, therefore, the order should not stand.”³ The Federal Trade Commission and some of its members — Anderson, et al. — appeal.

It is dear from the language of § 2(a) that the Commission has no power to fix and establish quantity limits unless it first makes the finding required by the quantity-limit proviso thereof, quoted above. The primary question is, therefore, whether the District Court correctly held the requisite finding was not made. For if it was not, the matter is at an end, and we need not consider the contentions of appellees that they were denied procedural rights when the Rule was made and that the Rule itself, based not on factual findings but on unwarranted inference from the borrowed experience of the Interstate Commerce Commission, is arbitrary and capricious.

The Commission concedes that the three formal findings, upon which it said in the order of promulgation it was basing the Rule,⁴ do not include a finding that available purchasers in quantities greater than a carload are so few as to render differentials on account thereof unjustly discriminatory or promotive of monopoly. Instead of dealing directly with that question of fact in its findings, the Commission seems to have been primarily concerned with the fewness of available purchasers in annual dollar volumes greater than $600,000.⁵ Obviously, a finding concerning that does support a rule fixing a quantity limit of one 20,000-pound carload.

The Commission argues that the vital finding, which it admits was not expressly made, sufficiently appears in what it termed a “Statement of Basis and Purpose,” appended to the promulgating order, which is in the nature of an opinion concerning tire pricing practices. Assuming without deciding that the “Statement” can be construed as indicating a finding of the sort necessary to support the Rule, we hold it may not be used to supplement the formal findings in the manner suggested. It may be that, had the Commission not made any specific separate findings labeled as such, it could have supported the order by writing an opinion embodying the requisite finding of fact. But, when it made formal findings in separate numbered paragraphs and said it was basing its order upon them, the order must stand or fall on the basis of those findings alone.

Section 2(a) conditions its grant of authority upon the prior making of a simple finding. Though well aware of the statutory requirement, the Commission did not meet it in the formal findings on which the order was based. It chose to make a finding concerning the paucity of available purchasers in quantities greater than a certain annual dollar volume, and then fixed a quantity limit in terms of a carload. Even though the Commission’s accompanying Statement may have indicated its belief that available buyers in quantities greater than a carload are so few as to give it authority under the quantity-limit proviso (which appellees seriously question), the Commission did not purport to base its order on that belief. We find no satisfactory explanation of its failure to do so. When a statute provides, as this one does, that a specified finding is a prerequisite to the exercise of power, and where formal findings are made which are said to be the basis of the power claimed, there is no justification for reliance on a later statement to support the exercise of the power.

Although Rule 52 of the Federal Rules of Civil Procedure

* does not apply to administrative agencies, it furnishes a helpful analogy in the consideration of the present question. The Rule provides that in all actions tried upon the facts without a jury, the court shall find the facts specially arid state separately its conclusions of law thereon; and that “If an opinion or memorandum of decision is filed, it will be sufficient if the findings of fact and conclusions of law appear therein.” With respect to this the following was said in Ohlinger v. United States, 9 Cir. 1955, 219 F.2d 310, 311:

“ * * * Under the circumstances referred to in the rule, it is not necessary to file formal findings of fact and conclusions of law, but when the trial court does make formal findings, they alone serve as the court’s findings of fact. In the words of the Supreme Court: ‘We are not at liberty to refer to the opinion for the purpose of eking out, controlling, or modifying the scope of the findings.' [Stone v. United States, 164 U.S. 380, 17 S. Ct. 71, 41 L.Ed. 477.]” (Emphasis in the cited opinion.)

Being of the view that the reasoning of the Ohlinger ⁶ opinion is sound and should be applied to the agency action involved here, we need not discuss appellees’ criticisms of the Rule itself and the method by which it was adopted.

Affirmed.

1 . Act of Oct. 15, 1914, c. 323, § 2, 38 Stat. 730, Act of June 19, 1938, c. 592, § 1, 49 Stat. 1520, 15 U.S.C.A. § 13(a).

2 . B. F. Goodrich Co. v. Federal Trade Comm., 1953, 93 U.S.App.D.C. 50, 208 F.2d 829.

3 . B. F. Goodrich Co v. Federal Trade Comm., D.C., 1955, 134 F.Supp. 39, 41.

4 . The order, after reciting three formal findings, said:

“It is therefore ordered, That the following rule * * * be, and it hereby is, promulgated * * *.” (Emphasis supplied.)

5 , The first of the formal findings follows:

“1. Available purchasers in the greater quantities of annual dollar volumes of six hundred thousand (600,000) dollars and more are so few as to render differentials on account thereof unjustly discriminatory against purchasers in smaller quantities and promotive of monopoly in the lines of commerce in which the sellers and purchasers, respectively, are engaged.”

28 U.S.C.A.

6 . Cf. 2 Barron and Holtzoff, Federal Practice and Procedure § 1128 (1950).