United States v. St. Regis Paper Company

355 F.2d 688, 1966 U.S. App. LEXIS 7481, 1966 Trade Cas. (CCH) 71,662
CourtCourt of Appeals for the Second Circuit
DecidedJanuary 19, 1966
Docket29746_1
StatusPublished
Cited by53 cases

This text of 355 F.2d 688 (United States v. St. Regis Paper Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. St. Regis Paper Company, 355 F.2d 688, 1966 U.S. App. LEXIS 7481, 1966 Trade Cas. (CCH) 71,662 (2d Cir. 1966).

Opinions

MOORE Circuit Judge.

In 1959 the Federal Trade Commission (FTC) issued a consent cease and desist order prohibiting appellant, St. Regis Paper Co. and 16 other manufacturers of multiwall paper shipping sacks, from engaging in certain concerted pricing practices. During the years 1962, 1963 and 1964, the Antitrust Division of the United States Justice Department convened two grand juries in the United States District Court for the Eastern District of Missouri to investigate possible violations of the Sherman Act, 15 U.S.C. §§ 1, 2, by appellant and others, arising out of their pricing practices. No indictment, however, was returned against any party. Thereafter, the Attorney General, at the request of the FTC1 and in reliance on information [691]*691obtained during the three-year grand jury investigation commenced the present suit in the United States District Court for the Southern District of New York to recover civil penalties under Section 5(1) of the Federal Trade Commission Act (FTCA), 15 U.S.C. 45(l),2 in the amount of $230,000 for the alleged violation by appellant of the 1959 FTC consent cease and desist order.

Subsequently, appellant moved to dismiss the complaint asserting that the district court lacked subject matter jurisdiction since the FTC had not, in accordance with its usual practice, certified the case to the Attorney General pursuant to Section 16 of the FTCA, 15 U.S.C. § 56.2 3 Appellant contended that the requirements of Section 16 were jurisdictional and that the Attorney General had no power to proceed under Section 5(1) absent an FTC certification. The district court denied the motion, finding that the Section 16 certification procedure was not “so essential a part of the statutory scheme” that congressional intent would be frustrated if the Attorney General proceeded under Section 5(1) without it. The court concluded that Section 16 merely defines an administrative function of the FTC, “a method to be used by * * * [it] in the normal course of discharging its duty,” which does not affect the power of the Attorney General to institute civil penalty suits under Section 5(1). United States v. St. Regis Paper Co., 240 F.Supp. 36, 38 (S.D.N.Y.1965).

Upon appellant’s motion, the district court amended its decision to conform to the requirements of the Interlocutory Appeals Act, 28 U.S.C. § 1292(b). Thereupon, appellant applied to this court for leave to appeal and the application was granted April 7, 1965.

This appeal very possibly raises for the first time the question of whether Section 16 of the FTCA, which provides that whenever the FTC has reason to believe that anyone subject to a Commission cease and desist order is liable to a penalty under Section 5(1) of the FTCA, “it shall certify the facts to the Attorney General, whose duty it shall be to cause appropriate proceedings to be brought” to enforce Section 5(1), constitutes an absolute limitation on the Attorney General’s power to commence suits for civil penalties under Section 5(1). Appellant contends that Section 16- and Section 5(1) of the FTCA must be read and applied together,4 and points out that this is the first civil penalty suit in which the Attorney General has proceeded under Section 5(1) on his own motion. The Government, while conceding that civil penalty suits are customarily initiated by FTC certification, regards that procedure as merely a convenient means [692]*692for informing the Attorney General of possible violations of the Commission’s orders. It contends that Section 5(1) fully empowers the Attorney General to initiate civil penalty suits on the basis of independently obtained information, regardless of the Commission’s view concerning the alleged violation of its order, and asserts that the courts have implicitly recognized the jurisdictional completeness of Section 5(1). The question of the interrelationship between Section 5(0 and Section 16, however, was not raised in any case cited by the Government, see United States v. American Greetings Corp., 168 F.Supp. 45 (N.D. Ohio), aff’d 272 F.2d 945 (6th Cir. 1958); United States v. Piuma, 40 F. Supp. 119 (S.D.Cal.), aff’d 126 F.2d 601 (9th Cir. 1941); United States v. Hindman, 179 F.Supp. 926 (D.N.J.1960), nor has it been raised in any case litigated to date under the FTCA.

It is generally recognized that whether procedural requirements such as those set forth in Section 16 of the FTCA are mandatory cannot be determined by merely examining the form of the statute involved, i. e., by a mere literal reading of the law, but “can only be determined by ascertaining the legislative intent. If a requirement is so essential a part of the plan that the legislative intent would be frustrated by a noncompliance, then it is mandatory.” Vaughn v. John C. Winston Co., 83 F.2d 370, 372 (10th Cir. 1936); Van Keppel v. United States, 206 F.Supp. 42 (D.Kan.1962). See generally 3 Sutherland, Statutory Construction §§ 5801-5826 (3d ed. 1943). Unfortunately, the legislative history of Sections 16 and 5(1) is sparse and unilluminating and, thus, sheds little light on their intended relationship. Both provisions were enacted as part of the 1938 Wheeler-Lea Amendment to the FTCA which was aimed primarily at broadening the FTC’s jurisdiction by granting it power to regulate “unfair or deceptive acts or practices in commerce” in addition to “unfair methods of competition in commerce,” and at eliminating the cumbersome procedures for the enforcement of FTC cease and desist orders by providing that they would become final unless an appeal were taken within the statutory time period provided. 15 U.S.C. §§ 45(a), (g). Both Section 5(1) and Section 16 were introduced into Congress and included in the 1938 amendment with little explanation or elaboration in hearings or debates.5 **See Austera, Five Thousand Dollars a Day, ABA Section of the Antitrust Law 285, 289 (1962). The Government urges, however, that a remark made by Congressman Lea while discussing the relation between Section 16 and Section 14 of the FTCA, 15 U.S.C. § 54, which provides for fines and imprisonment for false advertising in violation of 15 U.S.C. § 52(a),6 to the effect that the Attorney [693]*693General could prosecute violations of that section on his own motion, without awaiting FTC certification,7 demonstrates that certification is equally dispensable with respect to Section 5(1) civil penalty suits. We do not feel that this expression of opinion has any significance for the problem presented here.

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355 F.2d 688, 1966 U.S. App. LEXIS 7481, 1966 Trade Cas. (CCH) 71,662, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-st-regis-paper-company-ca2-1966.