Motion to Dismiss or Affirm — Double Eagle Lubricants, Inc. v. Texas

“

<a

Se oo ae Dar

e 2 exent a ee ef}

SRR lee BREN CE

. ae ae Ye,

WUT I | . Otfiee-Supreme Court, U.S.

| FILED:

- APR 3 01966

NO. 1177: —|_ JOHN F. DAVIS, CLERK

IN THE

| SUPREME COURT OF THE UNITED STATES

October Term, 1965

_ DOUBLE sasnceianes LUBRICANTS,,. LINC... .

; A ppellant

sa

THE STATE OF TEXAS

aa Appellee -

ON APPEAL FROM THE UNITED STATES

DISTRICT COURT FOR THE NORTHERN

DISTRICT OF TEXAS

MOTION TO DISMISS AND/OR AFFIRM

‘WAGGONER CARR |

Attorney General of Texas

- HAWTHORNE PHILLIPS

First Assistant Attorney General

T. B. Wricut é 3

* Executive Assistant Attorney General

Howarp M. FENDER

Assistant Attorney General

Lonny F. ZwIiENER

Assistant Attorney General

Rosert W. Norris

Tie kisses _ Assistant Attorney General

Attorneys for Appellee

Box-R, Capitol Station

Austin, Texas 78711 ©

INDEX

Page .

‘ Opening Statement................ Rg ch eo oe eee 4

Opinion Below Eres AS ate ete, Sensi PE ae 1

ect ara Si sen wai ear pee 2

Questions Presented ......_.... » Seiten aa Se yee 2

I D5 Soe et ee ey ie reas 3

ne Or i hk ei pte es ee

Argument I

A. THE CONTENTION THAT THE TEXAS LAW HAS

BEEN PRE-EMPTED BY FEDERAL LAW WILL

NOT SUPPORT JURISDICTION OF A DIRECT

APPEAL ID TEMS MAIUME 2... eee eee. +5

B. THE FEDERAL PRE-EMPTION QUESTION PRE-

. SENTED IS TOO INSUBSTANTIAL TO WARRANT

* FURTHER ARGUMENT BEFORE THIS COURT... 8

, Ae II .

THE CONTENTION THAT THE TEXAS: LAW

_ CONSTITUTES AN UNDUE BURDEN ON COM-

MERCE IS TOO INSUBSTANTIAL TO SUPPORT

JURISDICTION OF A DIRECT APPEAL TO THIS

COURT OR WARRANT FURTHER ARGUMENT

so a pes acs na i i, Sr ee 17

Oupsniioin Rope ee ree ie ee Sa aoe ee 23°

Certificate ae ere Wet hee 24

Appendix ............ Rae ee Oe ee Ae pets 25

' Allen-Bradley, 1111 v. Wisconsin Employment Relations

$$

~ LIST OF icine

Page

Board, 1942, 315 U.S. 780, 86 a Ed. 1154, 62 S. Ct.

“bh anaellcaseiatan ee asta setae eer eerie ... 15, 16.

- Atlantic Refining Co. v. Trumbull, 43 F. 2d 154 (D.C. |

saris ees erie, 20

Brotherhood: of Laas Engineers et al. v. Chicago,

Rock Island & Pacific Railroad Co., 382 U.S. 423,

15 L. Ed. 2d 501, 86 S. Ct. 594 (1966) Gs ee 6, 14, 15

Buck v. California, 343 U.S. 99, 96 L. Ed. 775, 72 S. Ct.

ee I re mR cone Oe hes ae oes Ah 14

California Water Service Company v. City of Redding, ©

304 U.S. 252, 82 L. Ed. 1323, 58 ey os oe : ie

- California v. Zook, 336 U.S. 725, 93 L. Ed. 1005, 69 S. Ct.

ls ov ea ea cen eee ee e 16, 19

Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 86 L. Ed.

_ _ 154, 62 ee, ee A es os mie ke ae wae ee 22

Colonial Airlines v. James, 202 F. 2d 914, 919 n4 (2nd ©

a aap aoe ie es 9

Colorado A Siesta Commission v. Continental

Airlines, Inc., 372 U.S. bai 83 S. Ct. 1022, 10 L. Ed.

2d 83 (1963) ..... pea beer gee) Sane 14 .

Corn. Products Refining Co. v. Eddy, 249 U. S. 427, 63

L. Ed. 689, 39 S. Ct. 325 (1918) ..... eeu. seers 20; 21 -

‘Double Eagle -Lubricants, Inc., v. New Mexico Board of

Revenue, Gasoline Tax Division, District of New |

Mexico, No. 4549 (August 8, 1961) .............. . 20

- Double Eagle Lubricants, Inc., et al. Docket No. 8589, de-

cided October 22, 1964 pone egal co 9,11

Double Eagle Lubricants, Inc. mS , Federal Trade Commis-

SR WR EE Sg a eee os hr ik Sige gatas 10

Ex Parte Poresky, 290 U.S. 30, 78 L. Ed. 152, 54'S. Ct. 3 ‘17

Fletcher v. Jones, 105 F. 2d 58, 61-62 (D.C. Cir. 1989),

ee err ere

Florida: Lime and Avocado Growers, Inc., v. Paul, 373 U. Ss.

132, 83 S. Ct. 1210, 10 L. Ed. 2d 248 (1963) ere; * ao

rie

—— a

LIST OF AUTHORITIES—Continued_

- Page

Head Vv. New a Board of Examiners in Optometry,

374 U.S. 424, 83 &. Ct. 1759, 10 L. Ed. 2d 983

( 1963) pee Pee ee er ent ie ee eee 14, 15, 18

Interstate N atural Gas Co. v. Southern California Gas

Co., 209 F. 2d 380, 385 (9th Cir. RS rae 9

Kelly v. Washington, 302 U.S. 1, 82 L. Ed. 3, 58 S. Ct.

87 (1937) Dn pay ea eee aes OE ae NL RE aT 13

Kesler v. Department of Public Safety, 369 U. S. sai 82

S. Ct. 807, 7 L. Ed. ee ec es 6

The Matter of Frank -A. Kerran, et. al., 54 F.T.C. 1035

(1958), affirmed 265 F. 2d 246 (10th Cir. ——

-cert. den. 361°U.S. S18 (1969)..........:.......,. a

McDermott v.’ Wisconsin, 228 U.S. 115, 57 * Ed. 754,

33 S. Ct. 431 (1981) . ci coe VE Latta a aes rere aes Ain 21

Milwaukee Mechanics Co. v. Oliver, 139 F. 2d 405, 407

ee Wee ey I se ee ea hes eet deae, 9

Missouri Pacific Railroad Co. v. Norwood, 283 U. S. 249,

75 L. Poses 1010, 51 S: Ct. 468 (1900)....-.......... 16

Paraco, Inc. \et al.; v. Department of Agriculture, et al, ~_

O57: P. od 981 " (1953) Nae yd ah ah TN a are 20

Patapsco Guano Co: v. Board of Agriculture, 171 US.

ee Fe Se le ee ee eee 20

Pennsylvania Public Utility Commission v. Pennsylvania

Railroad Company, — U.S. —, 15 L. Ed. 2d 324,

86 S. 8: Se ee eee 6,7

Plumley Vv. Massachusetts, 155 U.S. 461, 39 ‘L. Ea. 223,

i a a ig ies ae ah 20

Reid v. Colorado, 187.U.S. 137, 47 L. Ed. 108, 23 S. Ct.

8 rere rere oe ots Sen eee 16

Retail Clerks International Assn., Local 1625; AFL-CIO,

v. Schermerhorn, 375 U.S. 96, 11 L. Ed. 2d 179, 84

SS US re eee ere ree 14, 15

Royal Oil Corporation v. Federal Trade Commission, 262

I ae ee ae ae a 12, 13

Savage v. Jones, 225 U.S. 501, 32 S. Ct. 715, 56 L. Ed.

tae ee eee Sigeer 19

LIST OF AUTHORITIES —Continued

Page —

Southern Pacific Company v. Actinn, 325 US. 761, 89

L. Ed. 1915, 65 S. Ct. 1515 (1944) eed ten Lae ee 14

Standard Stock Food Co. v. Wright, 225 U.S. 540, 56

L, Ed. 1197, 32 ee) ne 20

Swift and Co., Inc., v. Wickham,.382 U.S. 111, 86S. Ct.

- ° 258, 15 L, Ed. 2d 194 (1965) ns eee 5,6, 7, 17

STATUTES

Title 28, Sec. 1252, United States Code Annotated eae 2

Title 28, Section 1253, United’ States Code Annotated . 2,5

Title, 28, Section 2281 (1964-ed.),

United States Code Annotated ........ velawres i

Section 5(g), 52 Statutes 111, 15 United States |

Code Annotated 45(g) ADS SR ae a ea 3

Section 5(a) (1), 66 Statutes 632, -

. 15 United States Code Annotated 45(a}(1)........ 3,9

_ Article 1106(b), Vernon’s Penal Code . 3, 4,5, 6, 8, 10, 16, 22

‘OTHER AUTHORITIES

16 C.F.R. 406, Federal Trade Commission Rules ........ - §

16 C.F.R. 406.1, 406.3, 406.5 (b) (2), = |

. Federal Trade Commission Rules ,................ 3, 10

.

+

-

ee a Nee

q

ye EY ARS CES SERED

_ 1177

IN THE

‘SUPREME COURT OF THE UNITED STATES:

October Term, 1965 |

DOUBLE EAGLE LUBRICANTS, INC.,

7 Appellant

Ve .

THE STATE OF TEXAS |

; a as Appellee

ON APPEAL FROM THE UNITED STATES

DISTRICT COURT FOR THE NORTHERN

ee OF TEXAS

MOTION TO DISMISS AND/OR AFFIRM

TO THE HONORABLE SUPREME COURT. alt

THE. UN ITED STATES:

OPENING STATEMENT

Appellee in the above entitled and numbered case

moves to dismiss and/or affirm on the grounds that

this. Court does not have jurisdiction’ of the appeal —

and that the questions presented are too insubstantial

to warrant further argument before this Court.

OPINION BELOW

The opinion of the District Court for the Northern

District/of Texas, Dallas Division, acting both in a

/

/

three-judge and single-judge capacity, is reported at

248 F. Supp. 515 (1965) (page 1, Appendix to Ap-

pellant’s Jurisdictional Statenient).

JURISDICTION

J urisdiction of this Honorable Court to review this ,

appeal is not conferred by 28 U.S.C. See. 1252, as the

constitutionality of an Act of Congress has: ant been

questioned: Neither does this Honorable Court have

jurisdiction of this appeal under 28 U.S.C." See.

1253, as the questions presented did not require adju-

- dication by a District Court composed of three-judges

in aceordance with 28 U.S.C. See. 2281 (1964 ed.).

QUESTIONS PRESENTED

I.

- WHETHER THIS COURT HAS JURIS-_

DICTION OF A DIRECT APPEAL FROM

THE UNITED STATES DISTRICT COURT

WHICH DENIED THE APPELLANT’S RE-

-. QUEST FOR AN INJUNCTION AGAINST ©

THE ENFORCEMENT OF A STATE LABEL-

ING STATUTE BASED UPON THE CON-

TENTION THAT THE STATE LAW HAD

BEEN PRE-EMPTED BY FEDERAL LAW:

AND, IN THE ALTERNATIVE, WHETHER

THE CONTENTION IS TOO. INSUBSTAN-

TIAL TO WARRANT: FURTHER =

MENT BEFORE THIS COURT. ‘/

: _: Seat Sa

-WHETHER THE. APPELLANT’S CON-

TENTION THAT. A TEXAS’ STATUTE,

ae. | <a tae

= °

.

————

.

- WHICH REQUIRES THAT RECONDI-

TIONED MOTOR OIL BE LABELED AS

SUCH IN ORDER TO PROTECT THE SAFE-

TY AND PROPERTY OF THE PUBLIC AND

TO PREVENT A DECEPTION OF THE PUB-

LIC AS TO THE NATURE AND QUALITY

_ OF THE PRODUCT, CONSTITUTES AN UN-

DUE BURDEN ON COMMERCE IS TOO IN-

SUBSTANTIAL TO SUPPORT THE JURIS- |

DICTION QF A THREE-JUDGE COURT |.

AND, IN THE ALTERNATIVE, TO WAR-

RANT FURTHER ARGUMENT BEFORE.

THIS COURT, :

STATUTES INVOLVED |

The primary statute involved is Texas' Penal Code

(Vernon 1948) Article 1106(b). Also ipvolved with

reference to the question of federal pre-emption are

' Sections 5(a) (1), 66 Statutes 632, 15 U.S.C. 45(a) (1) ;.

Section 5(g), 52 Statutes 111, 15 U.S.C. 45(g), of the ©

Federal Trade Commission Act and the Federal Trade

Commission’s Rules 16 C.F.R. 406, 16 C.F.R. 406.1,

. 406.3, 406.5(b) (2).

STATEMENT OF THE CASE

This is a direct appeal from the final judgment and

- decree entered on December 10, 1965, by the United

States District Court for the Northern District of.

. Texas which was composed of three judges specifically

constituted pursuant to 28 U.S.C. Section 2281. The

Court. dismissed the Appellant’s complaint which ©. .

. Sought a declaratory judgment and injunction against

the enforcement by the Appellee of Article ne lal

a

The. Appellant, an Oklahoma corporation, i is engaged

in the business of purchasing’ previously~—used il .

(erankease drainings) from gasoline service stations

and other sources which it ome to certain re-re-

‘fining processes and then sells the oil to dealers for —

\

\

Article 1106(b), provides that all re-refined or re-

processed oil sold in Texas be labeled ‘*Reconditioned

Motor Oil” in the manner specified in the statute. .

The Appellant alleged as grounds for its cause of

» action that the state statute had been pre-empted by a

resale to the public.

Decision and Order of the Federal Trade Commission .

and the state law ‘eonstituted an undue burden on

commerce.

In accordance with the District Court? Ss pre-trial

Order, -all facts were stipulated by the Appellant and

Appellee. Subsequent to the stipulations being filed _

with the District Court, the Appellee filed a Motion to

Withdraw Paragraph Five of the stipulations based

upon the Appellee being informed by the Federal

” Trade Commission that the Appellant was not in com--

pliance with the labeling requirements of the Federal

Trade Cominission and the letter which purported to

" approve the labels used by the Appellant, which was

included in: Paragraph Five, had been withdrawn by

the Commission. The District Court entered an Order

. granting the Appellee’s Motion on October 12, 1965.

Thereafter, the Court on its own Motion entered an

Order finding that the Appellant was not in compli-

ance with the Order of the Federal Trade Commission.

The case was heard by. the District Court on Novem-

ber 5, 1965, with no further evidence being introduced

| = either party.

— 4 —<—? |

—_——— eel

ee

On December 10, 1965, the District Court entered

its Opinion and Judgment dismissing the Appellant’s

complaint and held that the Texas law had not been

‘pre-empted by the Federal Trade Commission Act or ”

any order or decision of the Federal Trade Commis- -

sion and that Article 1106(b) was a legitimate exercise «.

of the State’s police power and did not violate the

commerce clause of the United States Constitution.

Judge Hughes, in her opinion, discussed this Court’s

decision in Swift and Company, Inc. v. Wickham, 382 ©

U.S. 111, 86 S. Ct. 258, 15 L. Ed. 2d 194 (1965), which

_ was decided after oral argument: in the. instant case.

Judge Hughes, in the absence of a determination by this

_ Court whether the interpretation of 28 U.S.C. Section

2281 (1964 ed.). in the Swift case was to be applied

retroactively, certified that as the District Judge to

whom this case was originally assigned, she had indi-

vidually arrived at the same conclusions as those con-

tained in the opinion written on behalf of the panel.

Thus, the District Cou urhs in dismissing the suit on the

. merits, acted both ina three-judge and single-judge

capacity.

. _ ARGUMENT.

. - 2

A. THE CONTENTION THAT THE TEXAS

LAW HAS BEEN PRE-EMPTED BY FED-

ERAL LAW WILL NOT SUPPORT JURIS-

DICTION OF A DIRECT APPEAL TO THIS

COURT. :

- Whether or not this Court has jurisdiction of the

_Appellant’s direct appeal under 28 ‘U.S.C. Section .

~ 1253, depends on whether the three-judge Court was

ae

2 ht aecie

required to hear aia determine the Appellant’s actic

to enjoin the enforcement of Article 1106(b)% I The

‘threshold question presented is whether a three-judge

court was required to adjudicate the Appellant’s con-

tention that the Texas. statute had been pre-empted by

‘Federal law. —

‘Discussed below ‘is the question of whether the Ap-

__ pellant’s contention ‘that ‘the Texas labeling require-

- ment constitutes an undue burden on commerce pre-

sents a substantial federal question. which would re-

- quire the ease to be heard by a three-judge court. -

In view of this Court’s decision in Kesler v. Depar t-

ment of Public Safety, 369 U.S. 153, 82 S. Ct. 807, 7

L. Ed. 2d 641 (1962), the State originally. requested ae

that the District Court composed of three judges be

empaneled in accordance with the provisions of 28°

U.S.C. Section 2281 (1964 ed.). As stated above, subse-

quent to oral argument but before the District.Court’s —

opinion and judgment in the instant case was entered,

this Court rendered its decision i in Swift and Company

v. Wickham, 382 U.S. 111, (supra), specifically: over-

ruling the Kesler doctrizie and holding that a three-

judge court is not required to hear a claim involving

Federal pre-emption. Se¢ also Brotherhood of Loco-

motive Engineers et al. v. Chicago, Rock Island & Pa- |.

cific Railrodd Co.;,.382 U.S. 423, 15 L. Ed. 2d 501, 86

.. §. Ct. 594 (1966). In light of this decision and because ™

mm. ofthe uncertainty of the decision being applied retro-

. actively, the District Court acted i in both a three-judge

and singlé-judge capacity. - |

In Pennsylvania Public U tility Vitali v Pe n= \

_ gylvania Railroad Company, —— U.8. —~, 15 ly. Wei:

| 2d 324, 86 . Ct. .423,, (1965), it wa again — i)

| a

aes 6

ee

7 ie a eee te

this Court did not have jurisdiction of a direct appeal

from a three-judge District Court which issued an in-

junction against the enforcement of an order of the

. Pennsylvania Utilities Commission ‘‘based on incom-

patibility between the State order and the Federal stat-

ute.’’ This case, in which a direct appeal had been tak-

‘ en before the Swift case was decided, clearly resolves

the uncertainty which faced the District Court and,

in effect, rendered the judgment on behalf of the three-

judge panel superfluous to that. entered by. Judge

whom the case was originally ee - :

It is further respectfully submitted that due to the

action of the District Court in a single-judge capacity ©

there is no necessity that the judgment in the instant

case be vacated in order that a new decree be entered

from which a.timely appeal may be taken to the Court

of Appeals as was done in Pennsylvania Public U tility

i . Hughes acting in the capacity of the single judge to 7

Commission v. Pennsylvania Railroad Company, 86.

' §. Ct. 423, (supra). This Court’s decisions in Swift

and Pennsylvania Public Utility Commission were de-

cided long before the Appellant’s Motion for New

Trial was overruled by the District Court and before

the time for taking an appeal began to run. Also, in

Swift the District Court acted in both a three-judge

and single-judge capacity and the~Appellant therein

lodged an appeal in the Court of Appeals from the

. Single-judge determination. Further, the discussion of

Swift and Company v.. Wickham, 382-U.S. 111, (su-

pra), in the opinion of the District Court below clearly

| provided the Appellant ample no ice and sbi prea dl

ea file an appeal in the United urt of Appeals

ai the ica \Cireuit within hen ii ste e

Pd

|

B. THE FEDERAL PRE-EMPTION QUESTION

PRESENTED IS TOO INSUBSTANTIAL TO

WARRANT FURTHER ARGUMENT BE-

FORE THIS COURT. eovauee

The District Court’s * holding that Axtivle 1106(b)

has not been pre-empted by federal law is plainly eor-

rect.

The Court’s finding, consistent with numerous de-.

cisions of this Court, that no conflict existed in .the

‘state and federal requirements and that the Congress

- and the Federal Trade Commission had expressed no

‘intent to pre-empt state laws of this nature, completely

forecloses any doubt as.to the inv alidity of the —

lant’s contention. , |

In the District east, the iii tinned that it

had been ordered by the Federal :Trade Commission

in The Matter of Frank A. Kerran, et al., 54 F.T.C.

. 1035 (1958), affirmed 265 F. 2d 246 (10th Cir. 1959), ©

cert. den: 361 U.S. 818 (1959), to piace labels on con-

tainers of motor oil showing that the oil contained

therein was processed from previously used oil. It was —

further alleged that the labels now being used by the .

-Appellant had been approved by the Federal Trade

- Commission and conformed to all. requirements of the

Commission. Therefore, the Appellant contended that

the Federal Trade Commission Order had pre-empted

the right of the State to enforce Article 1106(b).

| Contrary to the Appellant’s allegation, at the present

time its labels have not been approved by the Federal

Trade Commission, nor do they,m ibe the ————

sion| This’ iniededety v! examina-

nts of ithe Federal i e Commis-

=— oe

of the Ci

tion of' the docum

a mT,

5 a |

\

_*

‘sion which are contained as Exhibit I of the Appellee s

Motion to. Withdraw Stipulations, which is a part of

the record of this case (R. 35). These documents of

the Commission are public records. of which this Court

may take judicial notice and the Appellee respectfully

moves the Court to take judicial notice of these docu-

ments. Milwaukee Mechanics Insurance Co. uv. Oliver,

139 F. 2d 405, 407 n. 2 (5th Cir. 1944) ; Colonial Air- -

lines v. James, 202 F. 2d 914, 919 n. 4 (2nd: Cir. 1953) ;

Fletcher v. Jones, 105 F. 2d 58, 61-62 (D.C. Cir. 1939),

cert. den. 308 U.S. 555; Interstate Natural Gas Co. v.

Southern California Gas Co., 209: F. 2d 380, 385 (9th

_ Cir, 1953).

‘These documents clearly show that the labels now

being used by the Appellant had been approved by the

Federal Trade Commission but this approval was later

revoked and at the present time the labels do not com-

ply with the Federal Trade Commission requirements.’

Further, the Appellant herein was not incorporated

‘until after the Federal Trade Commission’s decision

was rendered in Frank ‘A. Kerran, et al., 54 F.T. 0.

1035 (1958), and was not a party to that proceeding *

. The first time the Appellant herein was involved in

a proceeding before the Federal Trade Commission

was in Double Eagle Lubricants, Inc., et al., Docket: No. j

8589, decided October 22, 1964. In this case, the Fed-

eral Trade Commission’ found that the labels now be- —

ing used by ‘Appellant violated Section 5(a)(1) of the

Federal Trade Commission Act, 15 U.S.C. 45(a) (1),

and do not comply with the Commission’ s Trade Reg-

- See Exhibit 1 attached to Defendant's Motio to Withdraw

) ‘ mr th

Stipulation! (R. 35). | |

*See ibit 2 - to Defendant’s Motion to Witadraw

Sori ae Bm (

‘ich. ||

_ Trade @ommission Act was passed to prevent| unfair

and deceptive,

ulation Rules relating to ‘Deceptive Advertising and

Labeling of Previously Used Lubricating Oil,’’ 16

C.F.R. 406.1, 406.3, 406.5(b) (2). ‘The. Appellant’s pe-_

tition.to review this order in the United States Court

of Appeals for the Tenth Circuit was denied on No-

vember 15, 1965, and is now pending before that Court

on a petition for rehearing. Double-Eagle Lubricants,

Inc. v. Federal Trade Commission, F, 2d ——.

In the area of inferacting Federal-State jurisdiction

coyering the same subject matter, by virtue of the su-

premacy clause of the United States Constitution, fed-.

eral law is paramount and state laws‘that are in con- _

flict. therewith, or which operate in an area which

Congress has clearly indicated an intention to pre-

empt the field must yield to the Federal authority.

Certainly, we do not question this principle. . |

This Court has stated many times that state laws,

especially those enacted pursuant to the state’s inher-

ent police power, will be invalidated by the federal au-

thority only when (1) the state law conflicts with the

federal law to the extent that both cannot stand in the

_ same area, or (2) where Congress clearly manifests

an intention to pre-empt the field.

Clearly, : as. found by the District Court, no conflict

exists in the requirements of the state law andthe

Federal Trade Commission’s Order or the Commis-

sion’s Trade Regulation Rules. Article 1106(b) was

_ passed by the Legislature of this State as a safety reg-

ulation and to prevent deception of the publie as to

the nature of the product being sold. The Federal

acts oF \pepetioes p jin 4 ee ite;

» | —Be

con +

|

Pi

Thus, it is clear that the two statutes have the same Me

' intent and purpose ‘and are mutually consistent.

The Federal Trade Commission. in Double-Eagle

Lubricants, Inc., et al., Docket No. 8589, (1964), .in

finding that the Appellant’s present labeling of its

containers of. previously used oil violates the Federal '

Trade Commission Act and does not comply with the

' standards of the Commission’s Trade Regulation Rules .

relating to ‘‘Deceptive Advertising and Labeling of .

Previously Used Lubricating Oil,”’ by its Final Order

—— the Appellant to cease and desist from:

“1. Adv ertising, sted ng for sale or selling, any

lubricating oil which is composed in whole or in

part of oil which has been re-cleaned or in any -

manner processed from previously used oil, with- -

out disclosing that such prior use to the purchaser

or potential purchaser in the advertising and sales

promotion material, and by a clear and conspicu-

ous statement to that effect on the front panel or |

~ front panels on the container.’

“—_ Representing i in anv manner: that lubricating

_ oil composed in whole or in part of oil that has

- been manufactured, reprocessed or re-refined from

oil that has been previously used for lubricating

purposes has been manufactured from oil that has

not been previously used.”

This Order is general in its terms and all that is

required is that the Appellant disclose on:the front

panel of its containers that the contents are made from

previously used oil. It does not specify either the man-

ner of the disclosure or any ‘‘magie words”’ to be used.

_ More impo ly, it does: not bi rohibi t th 4 use of ad-

| ditional word8 or phrases which|also taen fy the con-

tents of the roduet. | Neither ae the [Texas statute, |

\ THe | |

iti ie

|

which requires that both the front and back panel of

the container be labeled ‘Reconditioned Motor Qil,”’

‘prohibit the use of additional words or phrases that »

would further disclose the nature-of the motor oil. Nor

does the’ Federal or State law.prescribe the size or type

of lettering which would preclude the use of an addi-

- tional disclosure. Indeed, as stated by the District

Court, and contrary to the contention of'the Appellant -

- in its Jurisdictional Statement, because of the almost

~ exact similarity in the requirenients of ‘both the Fed-

eral and State law, the Appellant can easily fashion

its labels in a manner that would comply with both.

In fact, a single label that would comply with both

requirements was submitted by the. Federal Trade

Commission in its brief as amicus curiae to the District

Court.

The United States Court of Appeals for the Fourth

Circuit had. befere it the identical question presented

in the instant case in Royal Oil Corporation v. Federal ~

Trade Commission, 262 F. 2d 741 (1959). In this ease,

the Court was faced with the question of an alleged

conflict between the North Carolina statute, which is .

very similar to the Texas statute, and an Order of the

Federal Trade Commission, substantially identical to

the Order under consideration herein. The only dis-

tinction in the Royal Oil case and in the instant case

is that it-was argued that bécause of the conflict in

Federal and State law, State law shdéuld ,control.. The

Court in holding that there was no conflict in the Fed-

eral Trade Commission Order and the State statute

stated on page 743:

_ ‘However, wd think that the der of the Gom-

mission in this jcase’ does not i

| e state | tatute

reality’ ¢onflict)

‘with the North ai law. '

|

(eee rly fh

zane

| appropriate to their ery itorial juris on al

\; | thoug = rstate, “ay e ial :

| i a eae

| e e

does not prohibit the use of additional descriptive

words, and the Commission has indicated that it

is not the use of the-word ‘reprocessed’ which it. —

. considers deceptive, but rather the failure to make »

the additional specific disclosures that the reproc- -

essed oil had been previously used. The order is,

= clearly not in conflict with the state’s requirement,

_ and the petitioner can readily sie tid with both.””

- (Emphasis added)

The holding i in the Royal Oil ¢ case » eetablichie bey ond

preventure that: no conflict exists in the intent and.

purpose of, or phraseology required by- the Federal -

Trade Commission Order and the Texas statute, and

. the Appellant can readily comply with both.

The valid exercise by the State of its inherent ‘police

- power is not superceded by the mere entrance into the .

same field of regulation by the Federal Government, .

unless there exists’a conflict in the two Acts. Thus, the

Appellant’s contention to the District Court that the

State is now powerless to regulate previously used oil

sold in Texas due to ‘‘the fact that when the federal gov-

ernment exercised its power to regulate a commodity

in interstate commerce, the state legislation then be-

comes inoperative and the federal legislation exclusive

. in its application”’ ignores the test applied many times

by this Court. | ,

. In Kelly v. Washington, 302 U.S. 1, 82 L. Ed. 3, 58

S. Ct. 87 (1937), this Court stated the principles to be

applied in cases of this nature. Pages 9-10. .

“Under our constitutional system, there neces-

sarily remains to the States, until Congress acts,

a wide range for the permissible ererpiee of; power

1

{ePeHh al

The principle is thoroughly established that the

exercise by the State of its police power, which

would be valid if not superceded by Federal action,

is superceded only where the. repugnance or con-

flict-is so ‘direct and. positive’ that the two acts

eannot ‘be reconciled or consistently stand to-

gether.’

7 also Lrathoekood of Locomotive Engineers et al.

". Chicago, Rock Island & Pacific Railroad Co., 382

2 US. 423, 15 L. Ed. 2d 501, 86 S. Ct. 594 (1966) ; Head

_v. New Mexico Board of Examiners in Optometry, 374

U.S. 424, 83 S. Ct. 1759, 10 L. Ed. 2d 983 (1963) ; Colo-

rado Anti-Discrimination Commission v. Continental

Airlines, Inc., 372 US. 714, 83 8. Ct. 1022, 10 L. Ed. 2d

83 (1963) ; Buck v. California, 343 U.S. 99, 96 L. Ed.

775, 72 8. Ct. 502 (1951) ; Southern Pacific Company y

v. Arizona, 325 U.S. 761, 89 L: Bd. 1915, 65-S. Ct. 1515.

(1944).

The District Court’s holding that neither the Con-

gress nor the Federal Trade Commission has mani- .

fested any intention to pre-empt the State law is equal- —

ly clearly correct. ‘The established. principle stated

many times by this Court, as well as other courts, is

that before a federal statute or administrative order ~

' will be deeméd to have pre-empted:a valid state safety

regulation; Congress must have clearly manifested such.

an intention. In relation to this principle, the District Ben

Court correctly found that ‘‘no such clear statement of

Congressional intent of uniform Federal standards is

found in the Federal Trade Commission ‘Act. Neither

its-text or its legislative. history is there: anything to

indicate an intention by the Congress to confer exclu-

sive jurisdiction on the | Federal Trade Commissi ion.”’

‘In Retail Clerks Inter piopat Assoviation; Local

oa | 14/4 | l ae ; |

| me iy sia \

- 1625, AFL-CIO v. Schermerhorn, 375 U.S. 96, 11 L.

' Ed. 2d 179, 84 S. Ct. 219 (1963), this Court stated at

page 103: See

The -siurpose-of. Sonaesin: ie Hn tin sittvinie

RPA Congress under the commerce clause, —

mav displace state power (Citations Omitted) or

it may even, by silence indicate a purpose to let

state regulation be. imposed on the federal re-

_gime.‘. . .”? (Emphasis added )

In Head v. New Mexico Board of Examiners, 374

U.S. 424, 83 S. Ct. 1759, 10 L. Ed. 2d 983 (1963), ap-

pellants, newspaper.owners and a radio corporation,

had. been enjoined from accepting-for publishing with-

in' the State of New Mexico a Texas optometrist’s ad- |

vertisement- found to be in violation of. New Mexico

law. It was claimed by appellant-radio-corporation that’

regulation of advertising by radio had been jpre-empted —

by the Communications Act of 1934. In ove ruling this

contention this Court stated at page 431, 83 S. Ct. at

page 1764:

“The nature of the regulatory power given to

the federal agency. convinces us that Congress

could not have intended its grant of authority to ...-

supplant all the detailed state regulation of pro-

fessional advertising practices, particularly when

the grant of power to the Commission was accom- —

panied by no substantive standard other than the

‘public interest, convenience, and necessity.’ ’’

‘See also on this same. prineipiiBrotherhdod of Lo-

-comotive Engineers et al. v. Chicago, Rock Island &

_ Pacific Railroad Co., 382 US. 423, 15-L. Ed. 2d 501, '

86 S. Ct. 594 ( get ; Florida Lime and a oondo i. 7

ers, Inc. v. Paull P U.S. 132, 83 8. Ct! 1210710

2d 248 (1963) ; Alleh-Bradley, Lodal 1141 v. ‘Wisconsi

anes he

*

nissan Relations Board, 1942, 315 U.S. 780, 86 L.

Ed. 1154, 62 S. Ct. 820 (1941) ; Missouri Pacific Rail-

road Co. v. Norwood, 283 U.S. 249, 75 L. Ed. 1010, . .

51 S. Ct. 458, (1930); Reid v. Colorado, 187 U.S.

137, 47 L. Ed. 108, 23 S. Ct. 92 (1902); California v.

Zook, 336 U.S. 725, 93 L. Ed. 1005, 69 S. Ct. 841. (1949).

The. Federal Trade. Commission in its brief to the

District Court.and during oral argument clearly stated

that it does not consider the Texas law invalidated by

any action on the part of the Commission and there

exists no intent to pre-empt state law in this area. It

is respectfully submitted that the manifested intention

of the Commission to limit its authority and allow the

Texas regulation to be imposed i in the same field, pre-

cludes any question that Article irritated has been pre-

=< empted.

We respectfully submit that the argument waa au-

thorities cited above conclusively establishes the prin-

ciple that the mere entrance into the field by: the fed-

eral authority will not result in a displacement of an

otherwise valid state regulation in’the absence of a

-econflict-in the two regulatory schemes or unless the -

‘. intent to pre-empt the field has been clearly manifested

by the Federal Government. Unquestionably, in the

instant case, there is no conflict between Article 1106

(b) and the Federal Trade Commission requirements.

Nor has there been any intent on the part of Congress

or the Federal Trade Commission to pre-empt: state

~ law, rather the ‘Federal Trade Commission has clearly

| evidenced it is their intention that the Texas: law has

not been pre-empted by any ,action -on their part:

' Therefore, it. is established beyond prevehture that the

_ App lant

S. contention on this point is clearly too in-

Hee os .—_ we ‘ \

| | Niels |

eo dear . it

_ substantial to warrant further argument before this -

Court as the decisions of this Court have foreclosed

any doubt as to the validity of the District Court’s ©

a |

| : II.

THE CONTENTION THAT THE TEXAS | |

LAW CONSTITUTES AN UNDUE BURDEN | Sie .

ON COMMERCE IS TOO INSUBSTANTIAL ae :

TO.SUPPORT JURISDICTION OF A DI- |

RECT APPEAL TO THIS COURT OR WAR-

RANT FURTHER ARGUMENT’ BEFORE

THIS COURT. :

Due to the fact that the lack of substantiality of

the Appellant’s contention bears on both the require-

ments of a three-judge court and, in the alternative,

. Whether further argument before'the Honorable Court

is warranted,:- for purposes of argument the questions +

will be considered together... an (

,

The only other contention alleged by the pone

to support his eause of action is that the Texas label-

ing requirement constitutes an undue burden: on com-

* merce and consequently, violates the Commerce Clause

as the United States Constitution.

It is respectfully submitted that this contention is .-

conipletely devoid of merit and does not present a sub-

|stantial Federal question. It has long been held by. this

‘Court that a three-judge court is not calléd for when ~

‘the alleged constitutional claim is insubstantial, Swift

& Co., Inc. v. Wickham, 382 U.S. 111 (supra), Ex .

parte Poresky, 290 US. 30, 78 L. Ed} 152, 54 S.\Ct.3; et be ty

| California Water Service Company v, City of Redding, | | . l

iba deers uae yn Ct. 865. 1 | i |

1 —17— |

!.

It is a well established principle, enunciated in many

decisions of° this Court, that States in the exercise of

their police powers, may regulate matters in interstate

commerce as long as the regulation does not discrim-—

inate against foreign commerce, conflict with Federal

law, operate-in an area pre-empted by federal law or

‘impose. an undue burden or restraint on interstate’

commerce. — 3 :

In Head v. New Montes Board of Examiners, 374

U.S. 424, (supra), this Court in holding that the New. °

Mexico statute did not constitute an undue burden on

interstate commerce stated, beginning on page 427:

‘*Without doubt, the appellants’ radio station

and newspaper are engaged in interstate com- .

merce, and the injunction in this case has unques- _

tionably imposed some restraint upon that com-_

merce. But these facts alone do not add up to an

unconstitutional: burden on interstate commerce. .

As we said in Huron Portland Cement Co. v. City

of Detroit, 362 US 440, 4 L ed 2d 852, 80 S Ct

813, 78 ALR 2d 1294, upholding the application of

a Detroit smoke abatement ordinance to ships en-

gaged in interstate and international commerce: .

‘In determining whether the state has imposed an

undue burden on interstate commerce, it must be

borne in mind that the Constitution when ‘*eon-

ferring upon Congress the regulations of -com-

merce, . . . never intended to cut the States off

from legislating on all subjects relating to the

health, life, and all safety of their citizens, though

_ the legislation might indirectly affect the com-.

merce of the country. Legislation, in a great va-

riety of ways, may affect commerce and persons

engaged in it without constituting a regulation

of it, within the meaning of the Constitution. sulle

(Citations —— :

on I aw

See also Florida Lime’and Avocado Growers, Inc. v.

_ | Paul, 373 U.S. 132 (supra) ; isaac v. Zook, 336

U.S. 725, (supra). .

This Court has consistently held that State labeling

and inspection laws, in the absence of discrimination

against foreign commerce, do not impose an undue.

burden or restraint on commerce and\constitute a le-

gitimate exercise of the State’s police power.

In Savage v. Jones, 225 US. 501, 32 Ss. Ct. ‘715, 56 ben

L. Ed. 1182 (1912), there was in slved the validity of

an Indiana statute regulating the sale of concentrated

commercial feeds for. animals and providing for affix-

ing of labels and stamps on the packages as evidence

of the guarantee and inspection thereof. In holding —

that the Act did not constitute an unwarranted inter-

' ference with interstate nner this Court stated on

page 524;.32 S.Ct. on page 722:

‘‘The evident purpose of the statute is to pre-

vent. fraud and imposition in the sale of food for

domestic animals,—a matter of great importance

- to the people of the state. Its requirements were

directed to that end, and they were not unreason-

able. It was not aimed at interstate commerce, but,

without discrimination, sought to promote fair

dealing in the descr ibed articles of food .

when the local police regulation has real relation

to the suitable protection of the people of the:

_ state, and is reasonable in its requirements, it is

not invalid because it may incidentally affect in-

terstate commerce, provided it does not conflict

. with legislation enacted by. oe pues: to

its constitutional authority.”” a

The principle enunciated in Biwage- v. Jones, 225

U.S. 501, (supra), has been quoted with approval and

— =

.. 427, 63 L. Ed. 689, 39 S. Ct. 325 (1918) ; see also on this

-. reaffirmed by this Court in several later cases involv-

' ing similar questions. Standard. Stock. Food Co..v.:

Wright, 225. US. 540, 56 L. Ed. 1197, 32 S. Ct. 784°

(1911) ; Corn Products Refining Co. v. Eddy, 249 U.S.

same principle Plumley v. Massachusetts, 155. U.S.

461, 39 L. Ed. 223, 15 S. Ct. 154; Patapsco Guano Co.

v. Board of Agriculture, 171 US. 345, 43 L. Ed. 191,

~ 188. Ct 862. |

In Atlantic Refining Company v. Trumbull, 43 F.

2d\154, (D.C. Corin. 1930), sections of ‘a ‘state stat-

- ute ‘regulating motor oil labeling were held ‘‘clearly

justified in order to guard against deception.’’ A Cal-: |

ifornia statute that—requires labeling of previously

; ne oil was found constitutional in Paraco, Inc., et al.

uv. Department of Agriculture, et al., 257 P. 2d 981

(1953).

Thus, it is clear from the canes cited ius

. that state statutes which require proper labeling to

_ prevent deception ef the public have been held by this

Court and other courts to bé a legitimate exercise of

_ the state’s police power and do na constitute an undue

burden on commerce.

The Appellant has submitted to the Court the un-

reported Decision of a three-judge Federal Court in

Double-Eagle Lubricants, Inc. v. New Mexico Board

of Revenue, Gasoline Tax Division, District of New *

Mexico, No. 4549 (August 8, 1961), and states in its —

jurisdictional statement that this case is ‘‘based square-

‘ ly on the same set of facts as are herein involved.”

It is apparent from the decision in this case that

the Court was not apprised as to the true facts involved

_and misconstrued applicable law.

* —20—

*%

~

The*Court found that the — Trade Commis- |

sion:

i

ge . required the Plaintiff to label its allie

in peter ses with the Order of the Federal Trade

Commission, and that the said Plaintiff. placed on:

the containers in which its ships and sells its

products in commerce in accordance with the re-

quirements of the Federal.Trade Commission. . ‘as

As has been pointed out above, the Appellant was

not a party to the original Federal Trade Commission

Decision and, ore rendition of the New Mexico de-

cision, had been notified that the Federal Trade Com-

- mission did not —" of the labels being 1 used _by

Smid Appellant.— : Poe

~The ‘Court cites ‘site one decision, M sRermnett v.

Wisconsin, 228 U.S. 115, 57 L. Ed. 754, 33.8. Ct, 431

(1931), as authority for its holding that the New Mex-

ico labeling statute constituted an undue burden on

.cgmmerce. It is clear that the McDermott decision is

not authority for the proposition for which it is cited.

This Court on at. least.two occasions has r eviewed the 2 ————:

holding in McDermott. In Corn Products Refining Co. |

v. Eddy, 249 U.S. 427, 63 L. Ed. 689, 39 S. Ct. 325

; (1918), this Court stated on page 439:

“Tt is argued. that the present case is controlled

rather by McDermott v. Wisconsin, 228 U.S. 115, ©

130, 57 L.ed. 754, 765, 47. L.R.A. (N.S.) 984, 33

‘Sup: Ct. ‘Rep. 431, and in effect that this case

must be’ taken as: overruling Savage v. Jones.

The contention is unfounded. The authority of the

earlier decision .was expressly recognized in the

opinipn of the court in the later; the distinction

being placed (pp. 131, 132) upon the question

whether the regulations of the state concerning

<n dane

the‘ same subject-matter were in conflict with the

acts of Congress. The Wisconsin statute was held

to be in conflict because it required that packages

of food stuffs received through the channels of

Anterstate commerce, bearing labels intended to be

' In compliance with the act of Congress, while the

goods were still unsold and were in the possession

of the importer for the purpose of sale, and being:

- exposed and offered for sale bv htm, as a condition F

of their legitimate sale within the state, should |

bear the label required by the state law, and none

other,—in effect requiring the label that showed

- eompliance with the act of Congress to be removed —

>from the package before the first sale by the ini-

porter, and while the goods remained still subject

- to Federal inspection.’’ See also Cloverleaf But- .

ter Co. v. Patterson, 315 U.S. 148, 86 L.Ed. 754, —

62 S. Ct. 491 (1941).

Due to the New Mexico ‘court’s s unawareness of the

applicable facts, coupled with its-erroneous applica-

~ tion of prevailing principles, we submit that the case

. is not authority for the propositions relied on by the

-Appellant.

In applying the controlling principles of the author- .

ities cited above, it is clear that the Texas law is not

repugnant to the Constitution or laws of the United

States. Article 1106(b) clearly does not discriminate

against the Appellant as it applies equally to all motor

oil of this nature sold in Texas and-it does not impose

any additional burden on prodzcts originating in inte1*

state commerce. Conclusively, as pointed out above, the

State law does not conflict with the Federal law nor.

has the field been pre-empted by the Federal Govern-

ment. Neither does the State law impose any unreason-

able or undue burden on interstate commerce. The ”

tian

provisions of this statute merely require that the

product be labeled’ in a reasonable manner to truth-

fully advise the public of the nature and aie of its

contents.

Therefore, it is peapedtfully shina that due to

" no evidence being introduced by.the Appellant to sup-

port its contention that the State law is unconstitution-

al or imposes an undue burden on commerce, and con-

trary to the statement by the Appellant on page 5 of

_its Jurisdictional Statement, as the record clearly re-

flects, no evidence was introduced which shows ‘‘the

cans must be ordered for in advance in order that they -

be properly processed and lithographed, and ‘that the

labels cannot be changed after the can is manufac-

tured.”? Coupled: with the failure of the Appellant by

pleading and proof to overcome the strong presump-

tion in favor of the constitutionality of the Texas stat-

- ute and the clear showing above that the State statute

is a legitimate exercise of the police power of this.

State and a reasonable and nonburdensome regulation

_ >on conimerce, the Appellant’s allegation that the Texas

statute is unconstitutional is clearly without merit and .

: is too insubstantial to suppott the jurisdiction of a

three-judge court or, in the alternative; warrant fur-

‘ther ar gument before this Court. %

CONCLUSION’

We respectfully submit, based: on the argument and

‘authorities cited above, that this Court does ndt have:

jurisdiction of the Appeliant’s direct appeal front the

decision of the United States District Court and. that

the Appellant’s appeal should be. dismissed for lack

of jurisdiction: \In the alternative, should this Court

—23— .

a

agi

__find-that. the Three-Judge District Court did have

. jurisdiction of the Appellant ’s Complaint, it is respeet-

fully submitted that the Appellant presents no sub-

- stantial question for decision of this Court and that.

’ the judgment and decree of the District Court should

= affirmed. _-

Respectfully sieaueiih

\ WAGGONER CARR

Attorney General of Texas |

. Hawetgenme PHILLIPS

First Assistant Attorney General

of Texas

~ T. B. Wriext

a _Executive Assistant Attorney General

HowarpD M. FENDER a \

Assistant Attorney General *

Lonny F. ZwIENER

Assistant Attorney General

-Rosert W. Norris

* Assistant Attorney General

Attorneys for Appellee

The State of Texas

Box R, Capitol Station

- Austin, Texas 78741

CERTIFICATE OF SERVICE

I hereby certify that copies of the foregoing Motion

to Dismiss and/or Affirm were served upon John B.

- Ogden, Attorney for Appellant, Suite 1408-9 Liberty

| a went = Oe :

*

ra) .

7 -

Bank Building, Oklahoma City 2). Oklahoma; E. K.

' Elkins, Attorney for Federal Trade Commission, Of-

fice of the General Counsel, Washington, D. C.; and

Alex Bickley, Attorney for City- of Dallas, Dallas,

Texas, by depositing same,in the United. States Mail,

_ properly ‘addressed, postage paid, certified mail, on

‘this the 29th day of April, 1966. | )

Rosert W. Norris. |

. Assistant Attorney General

ac + APPENDIX A

Article *1106(b), Vernon’s Penal Code:.

- “(b) No person, firm, association of persons or cor-

poration shall sell or offer for sale as lubricating oil,

any oil that has been .rerun, refiltered, reclaimed or

refined from crank case draining or any other oil that

E has been theretofore used for purposes of lubrication,

unless the said oil is sold as and labeled ‘Reconditioned

Motor Oil.’ The words ‘Reconditioned Motor Oil’ shall

_ be plainly and legibly printed on each container, which

' said lettering shall be imprinted on. two (2) places on

_ the container or label 'in-a manner that said lettering |

' will appear both on the front and back surface of the

container when displayed to the public i in sale displays,

and which said lettering shall be in letters of not less -

than three-sixteenths (3/16) of an inch in height and

not less than one-sixteenth (1/16) of an inch in width

of each line used to form said letters.””

_