Federal Trade Commission v. Guignon

390 F.2d 323, 7 A.L.R. Fed. 324

• Court: Court of Appeals for the Eighth Circuit
• Decided: February 9, 1968
• Docket: No. 18716
• Status: Published

Opinions

VOGEL, Chief Judge.

The Federal Trade Commission here appeals from the dismissal of its action seeking a District Court order to enforce two discovery subpoenaes issued pursuant to §§ 6(b) and 9 of the Federal Trade Commission Act as amended, 15 U.S.C.A. § 45 et seq. We are principally concerned with whether the Federal Trade Commission, acting under § 9 of the Federal Trade Commission Act, 15 U.S.C.A. § 49, may, without the aid or consent of the Attorney General of the United States, seek enforcement of its own subpoenaes in the Federal District Courts. No factual determinations are necessary. The rather complicated background may, however, be found, from a consideration of our earlier opinion in Anheuser-Busch, Inc. v. Federal Trade Commission, 1966, 359 F.2d 487, and Chief Judge Harper’s opinion in this case, published at D. C., 261 F.Supp. 215.

The District Court held herein that the Commission may not seek enforcement of its own subpoenaes in a Federal District Court without the aid or consent of the Attorney General of the United States. Since that determination, another District Court in Federal Trade Commission v. Continental Can Co., Inc., S.D.N.Y., 1967, 267 F.Supp. 713, reached the opposite conclusion. We affirm the District Court herein.

We preface discussion of the issue involved here with the basic statutory provisions that in all litigation to which the United States or an agency thereof is a party, the Attorney General is given plenary power and supervision. 28 U.S.C.A. provides:

Ҥ 516. Conduct of litigation reserved to Department of Justice

“Except as otherwise authorized by law, the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, and securing evidence therefor, is reserved to officers of the Department of Justice, under the direction of the Attorney General.”

§ 519 of the same title further provides:

“Supervision of litigation

“Except as otherwise authorized by law, the Attorney General shall supervise all litigation to which the United States, an agency, or officer thereof is a party, and shall direct all United States attorneys, assistant United States attorneys, and special attorneys appointed under section 543 of this title in the discharge of their respective duties.”

It will be noted that Congress provided an exception — “except as otherwise authorized by law” — so that when an agency is given specific authorization to proceed without the advice, assistance or supervision of the Attorney General it may do so. Such an exception was found by the Supreme Court as to the Emergency Price Control Act when it said in Case v. Bowles, 1946, 327 U.S. 92 at page 96, 66 S.Ct. 438 at page 441, 90 L.Ed. 552:

“ * * * that Act specifically empowers the Administrator to commence actions such as this one and authorizes attorneys employed by him to represent him in such actions. § 201(a).”

See, also, Confiscation Cases, 1869, 7 Wall. (74 U.S.) 454, 457, 19 L.Ed. 196; Sutherland v. International Ins. Co. of New York, 2 Cir., 1930, 43 F.2d 969, 970, cert. denied, 282 U.S. 890, 51 S.Ct. 103, 75 L.Ed. 785.

The Commission contends that the exception, “except as otherwise authorized by law”, applies in this instance because § 9 of the Federal Trade Commission Act, 15 U.S.C.A. § 49, set out in pertinent part in the margin,¹ grants it authority to enforce its subpoenaes in the District Courts without the aid or consent of the Attorney General. More specifically, the Commission relies on the second sentence of paragraph 2 of § 9 which states:

“ * * * And in case of disobedience to a subpoena the commission may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of documentary evidence.”

It is immediately obvious that this language is more ambiguous than the language of provisions which clearly come within the “except as otherwise authorized by law” exception to the Attorney General’s broad authority to control and supervise government litigation under Title 28. Such provisions may expressly authorize an agency to appear by its own counsel with respect to a particular type of proceedings; as for example, under 15 U.S.C.A. § 53(a) the Federal Trade Commission is given authority to seek temporary injunctions against false advertising “ * * * by any of its attorneys designated by it for such purpose * * The authorization may also be broader, such as a grant of general authority for the agency’s lawyers to represent it in court, as in 49 U.S.C.A. § 16, par. (11), which authorizes the Interstate Commerce Commission to “employ such attorneys as it finds necessary * * * to appear for or represent the commission in any case in court * Another example is 29 U.S.C.A. § 154(a) of the National Labor Relations Act, which states that, “Attorneys appointed under this section may at the discretion of the Board, appear for and represent the Board in any case in court. * * * ” See, also, Case v. Bowles, supra, at 327 U.S. 96-97, 66 S.Ct. 438.

Despite the obvious disparity in the provision relied upon by the Commission for its authority to bring an action to enforce subpoenaes by its own attorneys rather than proceeding through the Attorney General’s office, the Commission presents us with an ex-tensive list of citations to cases in which the Commission has successfully brought actions to enforce its subpoenaes without proceeding through the office of the Attorney General.² The citations are impressive and include a case from this court, Adams v. Federal Trade Commission, 8 Cir., 1961, 296 F.2d 861. Nevertheless, in none of the cases was the authority of the Commission to so enforce its subpoenaes questioned. The mere exercise of authority, unchallenged, cannot of itself create a power which only Congress can give to the Commission. As Mr. Justice Jackson, speaking for the Supreme Court, said in United States v. Morton Salt Co., 1950, 338 U.S. 632, at page 647, 70 S.Ct. 357, at page 366, 94 L.Ed. 401:

“The fact that powers long have been unexercised well may call for close scrutiny as to whether they exist; but if granted, they are not lost by being allowed to lie dormant, any more than nonexistent powers can be prescript-ed by an unchallenged exercise.”

Additionally, the Commission’s interpretation appears to be in conflict with the purposes of the statute as revealed by the discussions of the original bill in the House. It is noted that in responding to a question during House debates on the jurisdictional aspects of the section, Congressman Covington, the bill’s sponsor and a member of the committee which drafted the measure, said:

“ * * * section 9, to which the gentlemen refers, [sic] was dealing entirely with methods and processes— it provides that the jurisdiction of the district courts of the United States shall be invoked only upon the application of the Attorney General of the United States, and only at the request of the Commission.” 51 Cong.Rec. 14,927 (63rd Cong., 2d Sess., 1914).

The Commission urges here that the 1966 holding of the Supreme Court in Federal Trade Commission v. Dean Foods, 384 U.S. 597, 86 S.Ct. 1738, 16 L.Ed.2d 802, supports its practice of proceeding in District Court by its own attorneys and without the aid or consent of the Attorney General. The Commission finds such support in the Supreme Court’s language at page 607 of 384 U.S., at page 1744 of 86 S.Ct.:

“ * * * There is no explicit statutory authority for the Commission to appear in judicial review proceedings, but no one has contended it cannot appear in the courts of appeals to defend its orders. Nor has it ever been asserted that the Commission could not bring contempt actions in the appropriate court of appeals when the court’s enforcement orders were violated, though it has no statutory authority in this respect. Such ancillary powers have always been treated as essential to the effective discharge of the Commission’s responsibilities.”

Even taken out of context in the Dean Foods case, the language just quoted offers little support for the Commission’s position because the language consistently refers to Commission proceedings before the Courts of Appeals, where no statutory authority is involved. Here we are concerned with proceedings in a District Court, and if there is any authority for the Commission to proceed independently of the Attorney General, it is statutory authority necessarily found within § 9 of the Federal Trade Commission Act. Placed in context, any support afforded by the above language of Dean Foods evaporates. The issue in that case was whether a Court of Appeals had authority to issue injunctions under the All Writs Act, 28 U.S.C.A. § 1651(a) (1964 ed.) before the Federal Trade Commission had issued a final order otherwise subject to appellate review. Thus, the issue in that case was far removed from that with which we are here concerned. Several distinctions between that case and the instant case are also relevant. In Dean Foods the application was made to the Court of Appeals rather than to a District Court and the application was for a temporary restraining order and a preliminary injunction rather than an action by the Commission to obtain enforcement of administrative subpoenaes. Jurisdiction of a Court of Appeals to grant preliminary injunctions to the Commission staying a proposed merger is significantly different in derivation than the jurisdiction of a District Court to enforce Commission subpoenaes. As noted by the Supreme Court in Dean Foods, the Court of Appeals’ power to grant the preliminary relief derived “ * * * not from the Clayton Act, but from the All Writs Act * * * 384 U.S. at 608, 86 S.Ct. at 1744 and was “in aid of * * * [its] jurisdiction”. 28 U.S.C.A. § 1651(a). Here the power of the District Court to enforce Commission subpoenaes is derived from the Clayton Act and must be enforced as required by the Clayton Act. The majority’s discussion of the various proposals to amend the Clayton Act at page 609, 86 S.Ct. at page 1745 of Dean Foods is further evidence of the irrelevance of that case to the power of the Commission to proceed in the District Court for relief without the consent of the Attorney General, as the court there noted:

“ * * * The proposals concerned only the power of the Commission itself to issue preliminary relief or to proceed in the district courts for that purpose. * * * the legislation as proposed would have had no effect whatever on the power that Congress granted the courts by the All Writs Act.”

Here the Commission obviously does not and could not contend that a court’s power under the All Writs Act entitles the Commission to enforce its subpoenas without proceeding through the office of the Attorney General.

We note further that Dean Foods was concerned with Commission administration of § 7 of the Clayton Act (15 U.S. C.A. § 18, acquisition by one corporation of stock of another) whereas here we are concerned with the Commission administration of § 2 of the Clayton Act (15 U.S.C.A. § 13, discrimination in price). The policy considerations cited by the court in favor of the Commission action in § 7 administration are generally not found in Commission § 2 administration.

Finally, we note that Dean Foods was solely concerned with the authority of the Court of Appeals to grant the writ sought, and did not directly or indirectly concern itself with the possible conflict between the Commission and the Attorney General over which agency was the proper one to seek the exercise of that authority. This fact is not without significance. We are concerned here with the jurisdiction of the District Court to grant the relief as sought by the Commission. No one disputes the fact that the District Courts may be called upon to enforce Commission subpoenaes. What is disputed is whether the Commission, through its own attorneys, rather than through the offices of the Attorney General, may make application to the District Courts for enforcement of Commission subpoenaes. Once the narrow confines of this issue are clearly realized, the comments in cases such as Oklahoma Press Publishing Co. v. Walling, 1946, 327 U.S. 186, at 200, n. 24, 66 S.Ct. 494, 90 L.Ed. 614, and Federal Trade Commission v. Tuttle, 2 Cir., 1957, 244 F.2d 605, cert. denied, 354 U.S. 925, 77 S.Ct. 1379, 1 L.Ed.2d 1436, can be placed in proper perspective. Viewed in that perspective, it is clear that those cases do no touch upon the limited issue here but were concerned with the broader questions of whether, under the particular factual circumstances, the Commission had the power to issue subpoenaes and the jurisdiction of the District Courts to enforce the subpoenaes issued. Implicit in the holding of these cases is the assumption that the application for enforcement was proper. Here we are concerned with whether the application for enforcement, rather than the jurisdiction of the District Court or the subpoena itself, is proper.

Some of the sweeping statements in the dissenting opinion in Dean Foods may suggest that Dean Foods is controlling here, but in answer we are mindful of Judge Friendly’s statement in United States v. Gorman, 2 Cir., 1965, 355 F.2d 151, at 155:

“ * * * We find no basis for so concluding, despite statements in concurring and dissenting opinions, * * rarely a safe guide to the holding of the majority.”

The Commission places great reliance on the 40-year-old case of Federal Trade Commission v. Millers’ Nat. Federation, 1927, 57 App.D.C. 360, 23 F.2d 968. In Millers’, the appellees successfully sought a temporary injunction to set aside an order directing that subpoenaes be issued and served upon the appellees or their officers. The Commission appealed the granting of this injunction. The Commission was proceeding in an investigation of the appellees pursuant to a Senate Resolution calling for an investigation of price fixing and discrimination. The Commission resisted the granting of the injunction, claiming equity lacked jurisdiction because the appellees had an adequate remedy at law. While it is true that the court’s ratio decidendi in that case suggests that the Commission has authority to enforce subpoenaes without resorting to the Attorney General, 23 F.2d at 970-971, the court was considering a “special appeal” to determine only “the question of the jurisdiction of the court below.” 23 F.2d at 972. That court then held that an injunction could be sought to restrain the Commission if the Commission exceeded its authority because there was no adequate remedy available to the petitioners at law. This court resolved the precise issue involved in the “special appeal” in Millers’ by reaching a contrary result. We held in Anheuser-Busch, Inc. v. Federal Trade Commission, 8 Cir., 1966, 359 F.2d 487, that a District Court lacked jurisdiction to grant injunctive relief against enforcement of Commission subpoenaes because the plaintiffs in that case had an adequate remedy at law.

We note that four years after the determination of the first Millers’ case in 23 F.2d 968, the same court, in Federal Trade Commission v. Millers’ Nat. Federation, 1931, 60 App.D.C. 66, 47 F.2d 428, reversed its position and held that the District Court lacked jurisdiction to grant injunctive relief against Commission enforcement proceedings. See, 94 L.Ed. pp. 420, 421 wherein the annotation says, as to the two Millers’ cases:

“ * * * It is interesting that, though the opinion in both of these cases is by the same justice, the conclusions reached appear to be exactly opposite.”

It would be strange, indeed, for this court to now adopt as the basis for the present decision the ratio decidendi of a ease on a different issue which reached a result opposite to the result reached by this Court on that same issue.

Millers’ must also be considered in connection with the decision by the Supreme Court of the United States in Federal Trade Commission v. Claire Furnace Co., 1927, 274 U.S. 160, 47 S.Ct. 553, 71 L. Ed.978, handed down only eight months prior to Millers’. Therein, the Supreme Court held that the Federal Trade Commission could not enforce its orders without the aid or consent of the Attorney General and the court added this relevant language at pages 173-174 of 274 U.S. [47 S.Ct. 553]:

“There was nothing which the Commission could have done to secure enforcement of the challenged orders except to request the Attorney General to institute proceedings for a mandamus or supply him with the necessary facts for an action to enforce the incurred forfeitures. If, exercising his discretion, he had instituted either proceeding the defendant therein would have been fully heard and could have adequately and effectively presented every ground of objection sought to be presented now. Consequently, the trial court should have refused to entertain the bill in equity for an injunction.” (Emphasis supplied.)

We agree with the reasoning of Chief Judge Harper in this case, where he said, at page 218 of 261 F.Supp.:

“The facts in the Claire case are indistinguishable from the present facts, except that here the Commission has gone one step further than they did in the Claire case.

“In Claire the Commission sought information similar to that which the Commission seeks here. * * *

“Here the Commission by order sought information as to costs and profits, exactly as it did in the Claire ease. After Anheuser-Busch refused to comply with this order the Commission, instead of seeking enforcement of the order through the Attorney General as the Claire case had expressly said to do, and said there was no other way to do it, it issued subpoenaes to obtain the information. Was this proper ? This Court thinks not.”

In Claire the Supreme Court also agreed that it was the intent of Congress that the Federal Trade Commission, under § 9, must seek the assistance of the Attorney General before invoking the assistance of the courts, and added at page 174 of 274 U.S., at page 556 of 47 S.Ct.:

“* * * Until the Attorney General acts, the defendants cannot suffer, and, when he does act, they can promptly answer and have full opportunity to contest the legality of any prejudicial proceeding against them.”

Additionally, we point out that the Federal Trade Commission Act and certainly § 9 thereof must be read in its entirety. See, N. L. R. B. v. Lion Oil Co., 1957, 352 U.S. 282, 289, 77 S.Ct. 330, 1 L.Ed.2d 331; United States v. Morton Salt Co., supra, 338 U.S. at 650, 70 S.Ct. 357; Federal Trade Commission v. Tuttle, supra, 2 Cir., 1957, 244 F.2d 605, 614. Thus, the second sentence of the second paragraph, quoted above, and the third paragraph must be read with the fourth paragraph, which provides in part that:

“ * * * any order of the commission made in pursuance * * * [of] sections 41-46 and 47-58 of this title * * * ” (emphasis supplied)

may be enforced by the District Court upon condition that the application for enforcement be made by the Attorney General. The third paragraph also grants the District Court power to enforce Commission subpoenaes by requiring an appearance before the Commission or requiring the production of documentary evidence “if so ordered” by the Commission. Thus, while paragraph three gives the District Court power to enforce subpoenaes, that paragraph further equates subpoenaes with orders and since paragraph four requires that the application for enforcement of “any order” be by the Attorney General upon the request of the Commission, the meaning of the paragraphs becomes clear. They are cumulative in the grant of jurisdiction to the District Court, but they are concurrent in the limitation to the Attorney General alone of the power to bring into effect the District Court jurisdiction.

It should be noted that following the argument of this case an order was issued inviting the Attorney General to appear as amicus curiae and file a brief expressing his views on the issue to be determined. His response urges that § 9 does not authorize the Commission to represent itself in subpoena enforcement proceedings. In support of his position, the Attorney General calls our attention to the fact that the subpoena enforcement provision of § 9 is virtually identical to the subpoena enforcement provisions for other agencies, such as: Civil Aeronautics Board and the Administrator of the Federal Aviation Agency (49 U.S.C. § 1484(c) and (d), § 1487(a) and (b)); Federal Communications Commission (47 U.S.C. §§ 401, 409(f)); Federal Maritime Commission (formerly Board) and the Secretary of Commerce (46 U.S.C. §§ 826, 828, 830, 1124(b)); National Mediation Board (45 U.S.C. § 157(h)); Secretary of Health, Education and Welfare (in Social Security investigations) (42 U.S.C. § 405(e)); Small Business Administration (15 U.S.C. § 687b); Subversive Activities Control Board (50 U.S.C. § 792 (c)), and that all of these agencies “are either represented by the Department of Justice or are required to obtain the Department’s authorization before seeking enforcement of an administrative subpoena by the district court.”

It is argued that there are policy reasons for encouraging a result contrary to that reached here. For example, the conclusion here may result in delay in obtaining enforcement or perhaps occasions might arise where the Justice Department would refuse to bring enforcement actions because that department felt the information unnecessary and either circumstance might unduly frustrate the fact-finding function of the Commission. Not only do we believe that such fundamental policy considerations concerning possible disagreement between federal agencies are best resolved by legislative action, we believe further that these policies were considered by Congress when the Federal Trade Commission Act was passed. This belief seems to have been concurred in by Mr. Chief Justice Taft in Claire, where he stated at page 174 of 274 U.S., at page 556 of 47 S.Ct.:

“ * * * It was intended by Congress in providing this method of enforcing the orders of the Trade Commission to impose upon the Attorney General the duty of examining the scope and propriety of the orders, and of sifting out of the mass of inquiries issued what in his judgment was pertinent and lawful before asking the court to adjudge forfeitures for failure to give the great amount of information required or to issue a mandamus against those whom the orders affected and who refused to comply. The wide scope and variety of the questions, answers to which are asked in these orders, show the wisdom of requiring the chief law officer of the government to exercise a sound discretion in designating inquiries to enforce which he shall feel justified in invoking the action of the court. In a case like this, the exercise of this discretion will greatly relieve the court and may save it much unnecessary labor and discussion.”

Affirmed.

1 . Ҥ J{9. Documentary evidence; depositions; witnesses

“For the purposes of sections 41 — 46 and 47-58 of this title the commission, or its duly authorized agent or agents, shall at all reasonable times have access to, for the purpose of examination, and the right to copy any documentary evidence of any corporation being investigated or proceeded against; and the commission shall have power to require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation. Any member of the commission may sign subpoenas, and members and examiners of the commission may administer oaths and affirmations, examine witnesses, and receive evidence.

“Such attendance of witnesses, and the production of such documentary evidence, may be required from any place in the United States, at any designated place of hearing. And in case of disobedience to a subpoena the commission may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of documentary evidence.

“Any of the district courts of the United States within the jurisdiction of which such inquiry is carried on may, in case of contumacy or refusal to . obey a subpoena issued to any corporation or other person, issue an order requiring such corporation or other person to appear before the commission, or to produce documentary evidence if so ordered, or to give evidence touching the matter in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof.

“Upon the application of the Attorney General of the United States, at the request of the commission, the district courts of the United States shall have jurisdiction to issue writs of mandamus commanding any person or corporation to comply with the provisions of sections 41— 46 and 47-58 of this title or any order of the commission made in pursuance thereof.”

2 . E. g., Federal Trade Commission v. Harrell, 7 Cir., 1963, 313 F.2d 854; Federal Trade Commission v. Tuttle, 2 Cir., 1957, 244 F.2d 605; Federal Trade Commission v. Green, S.D.N.Y., 1966, 252 F. Supp. 153; Federal Trade Commission v. Cooper, S.D.N.Y., 1962, CCH Trade Cases 70,353.