Federal Trade Commission v. Carter

636 F.2d 781, 205 U.S. App. D.C. 73, 31 Fed. R. Serv. 2d 392, 1980 U.S. App. LEXIS 11892
CourtCourt of Appeals for the D.C. Circuit
DecidedNovember 28, 1980
DocketNos. 79-1331, 79-1332
StatusPublished
Cited by1 cases

This text of 636 F.2d 781 (Federal Trade Commission v. Carter) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Federal Trade Commission v. Carter, 636 F.2d 781, 205 U.S. App. D.C. 73, 31 Fed. R. Serv. 2d 392, 1980 U.S. App. LEXIS 11892 (D.C. Cir. 1980).

Opinions

Opinion for the Court filed by Circuit Judge MacKINNON.

Concurring opinion filed by Circuit Judge WILKEY.

MacKINNON, Circuit Judge:

These consolidated appeals are brought by 26 tobacco and advertising corporations, or their parent corporations, and 26 chief executive officers of the corporations. Appellants contest an opinion and order of the Honorable Barrington D. Parker enforcing 26 subpoenas duces tecum issued by the Federal Trade Commission to the 52 respondents in the course of an investigation of cigarette advertising and promotion. We affirm.

Most of the issues raised in this forum were dealt with convincingly in the district court. We find unquestionable Judge Parker’s conclusion that the FTC has the statutory authority to initiate an investigation into cigarette advertising, and to issue subpoenas as part of that investigation. We also find no abuse of discretion in his denial of appellants’ discovery requests. On the other hand, while we uphold Judge Parker’s finding that the Statement of Purpose promulgated by the FTC provides generally sufficient notice, we leave the door open for appellants to raise specific objections to [76]*76production of documents that may fall outside the investigation’s stated scope. Finally, we decline to dismiss the individual corporate respondents from the suit since we conclude that they are proper parties. Although we are not completely comfortable with the method of service of process practiced by the FTC in this case, we find that it was legally sufficient for the purposes of this enforcement proceeding and within the discretion of the district court to approve.

I

On May 11, 1976, the FTC launched an investigation into the methods of advertising and promotion utilized by the cigarette industry. The Commission issued an authorizing resolution that identified the nature and scope of the investigation as follows:

To fulfill its obligation to report to the Congress pursuant to Section 8(b) of the Federal Cigarette Labelling and Advertising Act, as amended,1 and to gather and compile information and make reports to the Congress as authorized by Section 6 of the Federal Trade Commission Act;2 and to determine whether persons, partnerships, or corporations engaged in the manufacture, advertising, promotion, offering for sale, sale, or distribution of cigarettes may have been or may be engaged in the use of unfair or deceptive acts or practices, in or affecting commerce, in the advertising, promotion, offering for sale, sale, or distribution of cigarettes in violation of Section 5 of the Federal Trade Commission Act.3 (Footnotes added.)

The following day, May 12, 1976, the Commission issued 28 subpoenas,4 addressed to the chief executive officer of each corporate entity.5 As they have been subsequently modified by agreement of the parties,6 the subpoenas require production of documents or verified statements relating to: 1) respondents’ corporate organizations and strdcture; 2) information prepared by or for respondents since January 1, 1964, concerning “consumers’ or potential consumers’ attitudes towards, beliefs about, perceptions or understanding of, or behavior relating to, cigarettes”, and since January 2, 1971, cigarette advertising; 3) cigarette advertisements prepared by or for respondents since January 2,1971, whether or not disseminated.

In September of 1976, the companies filed motions to quash or limit the subpoenas pursuant to the Commission’s Rules of [77]*77Practice, 16 C.F.R. § 6217(b). The Commission substantially denied the motions; following the respondents’ failure to comply, the Commission filed a petition for enforcement in the court below.

On June 24, 1977, the respondents brought an action against the FTC in the district court of the Southern District of New York to declare the subpoenas invalid and enjoin enforcement. They also moved in the district court of Washington, D. C. for transfer. This motion was first denied, then assigned to another judge and granted, and then finally decided by a panel of this court, which vacated the transfer order. The respondents doggedly renewed their transfer motion before Judge Parker, but he denied it in his opinion, 464 F.Supp. at 687. Judge Parker’s opinion ordered full enforcement of the FTC’s subpoenas issued to those respondents bringing this appeal.

II

Appellants’ first claim, that the FTC lacks statutory authority to conduct an industry-wide investigation of the cigarette industry, raises old arguments that we had presumed were laid to rest by the Supreme Court’s decision in United States v. Morton Salt Co., 338 U.S. 632, 70 S.Ct. 357, 94 L.Ed. 401 (1950). In Morton, the Commission ordered a company to file special reports to show compliance with the terms of a decree issued under section 5 of the FTC Act, 15 U.S.C. § 45, which makes unlawful unfair or deceptive acts or practices. The company argued that the Commission’s section 6 investigatory authority could be used only in support of general economic surveys, as had been the practice under the Commission’s predecessor agency, the Bureau of Corporations, and that section 6 investigatory power could not be used in aid of section 5 proceedings. The Supreme Court rejected this claim:

While we find a good deal which would warrant our concluding that § 6 was framed with the pre-existing antitrust laws in mind, and in the expectation that the information procured would be chiefly useful in reports to the President, the Congress, or the Attorney General, we find nothing that would deny its use for any purpose within the duties of the Commission, including a § 5 proceeding. (emphasis added).

338 U.S. at 649, 70 S.Ct. at 367.

The breadth of section 6, subsections (a) and (f), is reflected in its terms:

The Commission shall also have power—

(a) To gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce, excepting banks, savings and loan institutions described in section 57a(f)(3) of this title, and common carriers subject to the Act to regulate commerce, and its relation to other persons, partnerships, and corporations. (As amended by P.L. 96-37 (1979)).
(f) To make public from time to time such portions of the information obtained by it hereunder, except trade secrets and names of customers, as it shall deem expedient in the public interest; and to make annual and special reports to the Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of its reports and decisions in such form and manner as may be best adapted for public information and use.

15 U.S.C. § 46.

Section 9 of the Act, 15 U.S.C. § 49

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636 F.2d 781, 205 U.S. App. D.C. 73, 31 Fed. R. Serv. 2d 392, 1980 U.S. App. LEXIS 11892, Counsel Stack Legal Research, https://law.counselstack.com/opinion/federal-trade-commission-v-carter-cadc-1980.