Appendix — American Air Filter Co. v. Federal Trade Commission
Supreme Court brief1978
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‘Supreme Cou, U.S > \ 7
{- FILED
JUL 28 1978
i
MICHAEL pop
— ODAK, JR., CLERK
Supreme Court of the United States :
Ocroper Term, 1978
No. 78- l . 7
=
American Arr Fiver ound » ne. Pf
Petitioners
Vv.
FeveraL Trave Commission, et al.,
Respondents
78-168
No. 78- 0
Tue Goopyrar Tire & Russer Company, et al.,
Petitioners
Vv.
FepveraL Trape Commusston, et al.,
Respondents
No. 78- 28-109
DeeriInc-MiILurKken, Inc.,
Petitioner,
Vv.
FepveraL Traps Commission, et al.,
Respondents
PETITIONERS’ JOINT APPENDIX TO PETITION
FOR WRIT OF CERTIORARI
Paess or Byaon S. Avams Painting, Inc, Wasnineron, D. C.
TABLE OF CONTENTS
Page
In Re FTC Line of Business Report Litigation; In
Re FTC Corporate Patterns Report Litigation,
United States Court of Appeals for the District of
Columbia Circuit (Opinion of July 10, 1978) .....
In Re FTC Line of Business Report Ea Litigation; In Re
FTC Corporate Patterns Iitigation, 432
F. Supp. 274 coe at tena onkan
In Re FTC Line of Business ay oon Litigation; In Re
FTC C te Patterns Report Litigation, 432
As eR ere
In Re FTC Line of Business Report Litigation; In Re
FTC Corporate Patterns Report Litigation, United
States District Court for the District of Columbia
(Memorandum Opinion and Order, July 11, 1977). 121
In Re FTC Line of Business Report Litigation, United
States District Court for the District of Columbia
(Final Order and Judgment, July 15, 1977) .....
In Re FTC Corporate Patterns Report Litigation
United States District Court for the District "
wy (Final Order and Judgment, July ~~
1
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
No. 77-1728
In Re: FTC Liye or Business Report Litiaation,
APPELLANTS
(Mise. No. 76-127)
No. 77-1931
In Re: FTC Liye or Business Report Lirication
American CyanamMip Company, et al., APPELLANTS
(Mise. Civil Action No. 76-0127)
No. 77-1942
Deertnc MiLuiken, INC., APPELLANT
v.
FrperaL Trape Commission, et al.
(Civil Action No. 76-1095)
No. 77-1944
Degerinc-MILuikEN, INC., APPELLANT
v.
FreperaL Trape Commission, et al.
(Civil Action No. 76-1109)
2
No. 77-1947
In Re: FTC Liyeg or Bustness Report Lirication
NL Inousrrizs, INc., APPELLANT
(Mise. No. 76-0127)
No. 77-1953
In Re: FTC Live or Bustness Report Litrication
FeveraL Trape Commission PARTIES, APPELLANTS
(Mise. Civil Action No. 76-0127)
No. 77-1956
In Re: FTC Liye or Business Report Lirication
CycLtops CoRPORATION, APPELLANT
(Civil Action Mise. No. 76-0127)
No. 77-1732
In Re: FTC Corporate Patterns Report Litication,
APPELLANTS
(Mise. No. 76-0126)
No. 77-1930
In Re: FTC Corporate Patrerns Report Larication
American CyaNnaMip Company, et al., APPELLANTS
(Misc. Civil Action No. 76-0216)
3
No. 77-1943
Derrinc-MILLIKEN, INC., APPELLANT
v.
FeperaL Trape Commission, et al.
(Civil Action No. 76-1123)
No. 77-1952
In Re: FTC Corporate Patrerns Report Litication
FeperaL TrapE CoMMISSION PARTIES, APPELLANTS
(Mise. Civil Action No. 76-0126)
Appeals from the United States District Court
for the District of Columbia
Argued December 16, 1977
Decided July 10, 1978
J. Randolph Wilson, with whom John S. Koch, and
Steven S. Rosenthal were on the brief, for appellants Air
Products and Chemicals, Inc., et al., in Nos. 77-1728 and
77-1732.
Lee A. Rau, with whom Edward T. Tait, John M. Wood
and Stuart M. Gerson were on the brief, for appellants
American Air Filter Co., Inc., e¢ al., in Nos. 77-1728 and
77-1732.
Mark Jacoby with whom Ira M. Milistein and Salem
M. Katsch were on the brief, for appellants Aluminum Co.
of America, et al., in Nos. 77-1728 and 77-1732.
4
John C. Reitz was on the brief, for appellants American
Greetings Corp., e¢ al., in Nos. 77-1728 and 77-1732.
James R. Henderson was on the brief, for appellants,
Inland Steel Co., e¢ al., in Nos. 77-1728 and 77-1732.
John F. Graybeal and Robert C. Houser, Jr. were on
the brief, for appellant Square D Co., in Nos. 77-1728
and 77-1732.
Andrew S. Krulwich was on the brief for appellant
Hoffman LaRoche, in Nos. 77-1732, and for appellant Lone
Star Industries, Inc., in No. 77-1728.
Philip J. Davis was on the brief, for appellant Cheme-
tron Corp., in Nos, 77-1728 and 77-1732.
James F. Rill was on the brief, for appellant Carpenter
Technology Corp., et al., in No. 77-1732, and for appellant
A. E. Staley Manufacturing Co. in No. 77-1728.
James F. Bromley was on the brief, for appellant United
States Gypsum Co. in Nos. 77-1728 and 77-1732.
Ronald P. Wertheim was on the brief, for appellant
Ashland Oil, Inc., in Nos. 77-1728 and 77-1732.
Daniel K, Mayers and Neil J. King were on the brief,
for appellants The Babcock and Wilcox Co., et al., in Nos.
77-1728 and 77-1732.
William C. Collishaw was on the brief, for appellant
White Consolidated Industries, Inc., in Nos. 77-1728 and
77-1732.
Samuel K. Abrams and Wilbur L. Fugate were on the
brief, for appellants Cone Mills Corp., et al., in Nos. 77-
1728 and 77-1732.
Raymond E. Vickery, Jr., was on the brief, for appellants
Hughes Tool Co., et al., in No. 77-1732.
Ramsay D. Potts and Steven L. Meltzer were on the
brief, for appellant Emerson Electric Co., in Nos. 77-1728
and 77-1732.
5
Milton Wolson and S. White Rhyne, Jr. was on the
brief, for appellant SCM Corp., in Nos. 77-1728 and 77-1732.
Albert R. Connelly was on the brief, for appellant Beth-
lehem Steel Corp., et al., in Nos. 77-1728 and 77-1732.
Edwin E. Rockefeller and Alan M. Frey were on the
brief, for appellant Norton Simon, Inc., in Nos. 77-1728
and 77-1732.
David J. Lewis and Elroy H. Wolff were on the brief,
for appellants Thomas Lipton, Inc., e¢ al., in Nos. 77-1728
and 77-1732.
Anthony B. Barton was on the brief, for appellant,
A.nerican Maize-Products Co., in Nos. 77-1728 and 77-1732.
Eve E. Backrack was on the brief, for appellant Food
Fair Stores, Inc., in No. 77-1732, and for appellant C.L.T.
Financial Corp., in No. 77-1728.
Coswell O. Hobbs, III, was on the brief, for American
Stores Co., in No. 77-1732.
Robert J. Pope was on the brief, for appellant Conti-
nental Group Inc., in No. 77-1732.
Philip A. Lacavara and Gerald Goldman were on the
brief, for appellants Merck and Co., Inc., et al., in No.
77-1728.
J. Stanley Stroud was on the brief, for appellants CPC
International, Inc., et al., in No. 77-1728.
David B. Lytle was on the brief, for appellant Republic
Steel Corp., in No. 77-1728.
Joseph W. Burns was on the brief, for appellant Inger-
soll-Rand Co., in No. 77-1728.
Ronald G. Precup was on the brief, for appellant Ameri-
can Beef Packers, Inc., in No. 77-1728.
Gilbert H. Weil was on the brief, for Bristol-Myers Co.,
in No. 77-1728.
6
William Simon, Harold F. Baker, David C. Murchison,
J. Wallace Adair, John DeQ. Briggs, III, and Stuart H.
Harris were on the brief, for appellants American Cyana-
mid Co., et al., in Nos. 77-1728, 77-1732, 77-1930 and 77-1931.
Robert E. Jordan, III, Edward E. Vaill and Robert M.
Goolrick were on the brief, for appellant, Atlantic Richfield
Co., in Nos. 77-1728 and 77-1732.
Andrew J. Kilcarr and Vincent Tricarico were on the
brief, for appellant Mobil Oil Corp., in Nos. 77-1728 and
77-1732.
Jesse P. Luton, Jr., John E. Bailey and Kevin F. Cun-
ningham were on the brief, for appellant Gulf Oil Corp., in
Nos. 77-1728 and 77-1732.
Paul J. Newlon, Victoria G. Traube and Michael A.
Lampert were on the brief, for appellant Milliken and Co.,
et al., in Nos. 77-1728, 77-1732, 77-1942, 77-1943 and 77-1944.
Leslie W. Jacobs was on the brief, for appellant The
Goodyear Tire and Rubber Co., et al., in Nos. 77-1728 and
77-1732.
Gerald P. Norton, Deputy General Counsel, Federal
Trade Commission with whom Jerald D. Cummins, Acting
Assistant General Counsel, Joanne L. Levine, Sophie A.
Krasitk, Thomas A. Sheehan and Arthur W. Adelberg,
Attorneys, Federal Trade Commission, were on the briefs,
for appellees Federal Trade Commission, in Nos. 77-1728,
77-1732, 77-1930, 77-1931, 77-1942, 77-1943, 77-1944, 77-1947
and 77-1956, and cross-appellants in Nos. 77-1952 and 77-
1953.
Frank R. Rosenfeld, Attorney, Department of Justice
with whom Earl J. Silbert, United States Attorney, Bar-
bara Allen Babcock, Assistant Attorney General, and
Leonard Schaitman, Attorney, Department of Justice, were
on the brief, for appellee Comptroller General, in No. 77-
1728.
Atta omen oe et ee
oe Ne 0 ald
7
Before Bazeton and Rosinson, Circuit Judges, and
Ausrey E. Rostnson, Jr.,* District Judge, United States
District Court for the District of Columbia.
Opinion per curiam.
Per Curntam: We review the decisions of the District
Court granting summary judgment to the Federal Trade
Commission (Commission or FTC) and enforcing the Com-
mission’s orders requiring appellant corporations to file
financial performance reports as part of the Line of Busi-
ness (LB) and Corporate Patterns Report (CPR) surveys.’
* Sitting by designation pursuant to 28 U.S.C. § 292(a) (1970).
‘Multiple enforcement actions were brought by the Commission
against companies who failed to comply with the 1974 LB and
1972 CPR orders. The actions relating to the two surveys were
assigned to Judge Flannery who consolidated them into two dock-
ets, In re FTC Line of Business Report Litigations, Master File
Misc. No. 76-127 and In re Corporate Patterns Report Litigations,
Master File Misc. No, 76-126. By order dated July 30, 1976 Judge
Flannery established procedures for his tandem consideration of
the two programs, (LB App. 162-186) In a series of opinions and
orders the District Court addressed the numerous issues raised by
the parties. Jn re FTC Corporate Patterns Report Litigations, 432
F.Supp. 274 (Jan. 21, 1977) (LB App. 187); 432 F.Supp. 291
(April 12, 1977) (LB App. 211) ; 1977-2 Trade Cas. 72,141 (July
11, 1977) (LB App. 239); (unreported Final Order and Judg-
ments) (July 15, 1977) (LB App. 271; CPR App. 248); 1977-2
Trade Cas. 72,420 (July 29, 1977) (denying motion to amend).
Pursuant to the final order and judgment of the District Court
entered July 15, 1977, the corporate parties were required to file
their Line of Business reports within 150 days of the date of the
order and the Corporate Patterns Reports within 90 days. A motion
for stay of the enforcement order pending appeal was denied by
the District Court on July 22, 1977 (LB App. 273) and by this
court on October 21, 1977 (LB App. 274). Petition was made to
the Supreme Court for a stay pending appeal in this court of the
Corporate Patterns Report orders. Justice Brennan granted the
petition on November 11, 1977 (CPR App. 253). Following several
extensions of the compliance date in the Line of Business program,
we issued an order on April 26, 1978 staying enforcement of the
LB orders pending our further consideration of the matter.
8
These two broad-based statistical surveys are conducted
by the FTC pursuant to its authority under Section 6(b)
of the Federal Trade Commission Act, which empowers the
Commission to require corporations to file informational
reports regarding the company’s ‘‘organization, business,
conduct, practices, management, and relation to other cor-
porations.’’? :
I. Toe FTC Surveys
A. The Line of Business Program.
In August 1975, as part of the Line of Business survey,
the Commission ordered 450 of the nation’s largest domes-
tic manufacturing concerns to file reports disclosing certain
indicia of financial performance for 1974.2 The 1974 LB
715 U.S.C. § 46(b) (1976) states that the Commission shall have
the power
To require, by general or special orders, persons, partner-
ships, and corporations, engaged in or whose business affects
commerce, excepting banks and common carriers subject to the
Act to regulate commerce, or any class of them, or any of
them, respectively, to file with the Commission in such form
as the Commission may prescribe annual or special, or both
annual and special, reports or answers in writing to specific
questions, furnishing to the Commission such information as
it may require as to the organization, business, conduct, prac-
tices, management, and relation to other corporations, partner-
ships, and individuals of the respective persons, partnerships,
and corporations filing such reports or answers in writing.
Such reports and answers shall be made under oath, or other-
wise, as the Commission may prescribe, and shall be filed with
the Commission within such reasonable period as the Commis-
sion may prescribe, unless additional time be granted in any
ease by the Commission,
*A more limited Line of Business survey was conducted for
1973, The LB form served on 345 cette d in the 1973 survey
differed from the 1974 form. See Bureau of Economics Staff Memo-
randum, 1974 Form LB Revision (LB App. 782). Numerous mo-
tions to quash the 1973 orders were denied by the Commission.
Preenforcement actions seeking to enjoin the 1973 survey were
OS AN ele Te lee OPAC Ae wipes Ml thane ©
Oe tactstaodlyn 6.
ee ea oe
LOA AS in nl A eal lle NBG he <a Sar eine sat
9
form sent to each corporate respondent consists of four
schedules.* Schedule I seeks information identifying the
company and its subsidiaries. Schedule II elicits a descrip-
tion of the company’s lines of business. Schedule III, the
heart of the form, exacts specific financial and statistical
data—including revenues, costs, profits and assets—for
each of the company’s lines of business. Schedule IV re-
requires reconciliation with other parts of the form and
with the company’s published financial data. The key fea-
ture of the survey is its requirement that each company
present its financial performance statistics in terms of a
uniform set of market categories.*
commenced in the District Courts of Delaware and the Southern
District of New York. Aluminum Co. of America v. FTC, 390 F.
Supp. 301 (S.D.N.Y. 1975) (LB App. 89); A.O. Smith Corp. v.
FTC, 396 F.Supp. 1108, 1125 (D. Del. 1975) (LB App. 55), rev’d,
530 F.2d 515 (3d Cir. 1976) (LB App. 121) ; A.O. Smith Corp. v.
FTC, 417 F.Supp. 1068 (D. Del. 1976) (LB App. 196), 403 F.
Supp. 1000 (D. Del. 1975) (LB App. 100). The Commission com-
menced an enforcement action in New York, FTC v. American
Standard, Inc., Civ. No. M18-304 (S.D.N.Y. Feb. 11, 1975), but
later decided to abandon enforcement of the 1973 orders when it
instituted proceedings to enforce the 1974 LB and the 1972 CPR
orders in the District Court for the District of Columbia. The
preenforcement actions in New York and Delaware, to which claims
regarding the 1974 LB and the 1972 CPR surveys had been added,
were transferred to the District of Columbia. A.O. Smith Corp. v.
FTC, 417 F.Supp. 1068, 1085-1091 (D. Del. 1976) (LB App. 153-
159).
Orders requiring reports for the 1975-1976 Line of Business sur-
vey have been served on 481 companies but the FTC has not insti-
tuted enforcement proceedings (LB App. 957).
*FTC Form LB (LB App. 735). See Instructions, Form LB,
General (LB App. 748).
5 The FTC has developed, based on thc Office of Management
and Budget’s Standard Industrial Classification system, 260 four-
digit codes which define manufacturing market categories (LB
App. 765).
10
The Commission proposes to aggregate the LB statistics
within each market category in order to identify areas of
the economy in which profits are relatively high or low and
to assess relationships between market structure and per-
formance, and to use this information to target particular
markets for industry-wide investigations into potential
antitrust violations or unfair trade practices.° Since cor-
porate financial performance data otherwise available to
the Commission are not reported in terms of uniform mar-
ket categories, the LB survey is expected to provide the
only performance statistics susceptible to comparison on
an industry-by-industry basis.’ Aside from internal use of
the LB data, the Commission has indicated an interest in
publishing the aggregate market statistics to facilitate ef-
forts for investors, managers and scholars to further the
effectiveness of the competitive system.*
The Commission began developing the Line of Business
form in 1970. After extended consideration and extensive
revisions, a limited survey was conducted to collect 1973
data.” Revisions were made as a result of the Commission’s
experience with the 1973 survey, and in April 1975 the
Commission published the proposed 1974 LB form in the
* Federal Trade Commission, Annual Line of Business Report
Program, Statement of Purpose (LB App. 308) (hereinafter cited
as LB Statement of Purpose) ; Supporting Statement, FTC Form
LB, 1974 Survey Version, Federal Trade Commission (July 1,
1975) (LB App. 715) (hereinafter cited as LB Supporting State-
ment).
"LB Supporting Statement, supra note 6, at 4 (LB App. 719).
* Supra note 6.
*The 1973 LB form was the subject of public hearings by the
Office of Management and Budget (see Minutes, LB App. 2601),
and notice and comment review by the Comptroller General (see
Report to the Comptroller General of the United States on the
Evaluation of the Federal Trade Commission’s Proposed Annual
Line of Business Report, May 10, 1974, at 3, LB App. 403).
<a a
eta oe
ll
Federal Register and solicited comments.”° In addition, the
FTC distributed copies of the proposed form and the Com-
mission’s supporting statement to numerous interested
parties, inviting their responses." On May 20, 1975, the
full Commission conducted a hearing at which testimony
was elicited from twenty witnesses regarding the proposed
LB program.” After considering the nearly 100 comments
received and the testimony presented, the F'TC revised
the LB form and submitted it to the General Accounting
Office (GAO) for clearance under the Federal Reports
Act.** Notice was published again in the Federal Register
and comments were solicited by the GAO.** Upon consider-
ation of the comments received, the GAO approved the LB
form for use by the FTC in a letter detailing its delibera-
tions.’* The Line of Business orders were subsequently
served on approximately 450 corporations.’* Motions to
quash the LB orders were made by 180 companies ” and
1°40 Fed. Reg. 17081 (April 16, 1975).
™ Letter from William F,. Long, Manager, Line of Business
Program (April 15, 1975) (LB App. 2297) ; LB Supporting State-
ment, supra note 6, at 9-10 (LB App. 723-724).
12 Transcript of Public Hearing on Proposed FTC Form LB for
Use in Collecting 1974 Line of Business (May 20, 1975) (LB App.
1435).
18 Letter from Virginia M. Harding, Acting Secretary of the
FTC, to Elmer B. Staats, Comptroller General of the United States
(July 1, 1975) (LB App. 2025).
#40 Fed. Reg. 28677 (July 8, 1975).
6 Letter from Monte Canfield, Jr., Director, General Accounting
Office, to FTC Chairman Lewis A. Engman (August 18, 1975) (LB
App. 798).
%® Order to File Special Report, 1974 Form LB (August 20,
1975) (LB App. 804).
1 E.g., Joint Motion to Quash Orders to File Special Reports
and for Other Appropriate Relief filed September 2, 1975, on
behalf of A. O. Smith Corp., et al. (LB App. 853; Motion of C.LT.
Financial Corporation to Quash Order to File Special Report and
12
denied by the Commission in a statement responding to
the objections advanced by the corporations."*
B. The Corporate Patterns Report Program.
The Corporate Patterns Report survey requires over
1100 major dome..ic corporations to report the value of
shipments from their domestic manufacturing establish-
ments in 1972, in terms of product classifications developed
by the Census Bureau for use in the Quinquennial Census
of Manufactures.’* The CPR survey also solicits 1972 data
regarding, inter alia, consolidated net manufacturing ac-
tivities and major acquisitions and disposals since 1972.”
As with the LB program, the FTC proposes to use the CPR
survey to create a data bank on market structures for use
by the Commission in antitrust enforcement, economic
analysis and policy planning.” The value of shipments data
will be used in conjunction with aggregate data published
by the Census Bureau based on similar information con-
tained in the 1972 Census of Manufactures.”
Memorandum in support thereof, filed September 22, 1975 (LB
App. 2421). For a list of companies which filed motions to quash,
see Appendix I to FTC Petition for Enforcement, ‘‘Motions to
Quash LB Orders Filed with the Federal Trade Commission by
Respondents’’ (LB App. 2547).
ss Statement of the Commission on Motions to Quash the Orders
to File the 1974 Line of Business Form (LB App. 878).
** Corporate Patterns Report for 1972, FTC Form CPR-1 (CPR
App. 305), FTC Form CPR-2 (CPR App. 318), FTC Form CPR-
S (CPR App. 322) ; Supporting Statement for the Federal Trade
Commission’s Corporate Patterns Report (Dec. 31, 1974) (CPR
App. 256) (hereinafter cited as CPR Supporting Statement).
*° Supra note 19.
* Supporting Statement, supra note 19, at 2 (CPR App.
3 Id. at 4 (CPR App. 259).
i
13
The Corporate Patterns Report survey was considered
initially by the Commission in 1972."* After testing the pro-
posed form on a small number of companies and effecting
some modifications,“ the FTC submitted the CPR form to
the General Accounting Office for clearance as required
under the Federal Reports Act. The GAO pubiished notice
of the proposed survey in the Federal Register and solicited
comments.** The comments received were duly considered,
and the GAO approved the CPR form in a letter to the
FTC detailing the substance of these comments.”* In addi-
tion to entertaining the comments supplied by the GAO,
the FTC conferred with representatives from the Census
Bureau and the Office of Management and Budget in a pub-
lic meeting in June 1975 * and less formally on other occa-
sions. In July 1975 the Commission adopted a resolution
authorizing the use of compulsory process,” and the Cor-
porate Patterns Report orders were served on 1100 com-
panies.” In response, motions to quash were filed by 390
companies raising numerous factual and legal objections.”
In an effort to accommodate corporate claims, the Commis-
sion deleted an unduly burdensome requirement that each
company rank itself as to each product category and re-
*8 See FTC CPR Brief at 9.
** Supplemental Statement for the Federal Trade Commission’s
Corporate Patterns Report (December 23, 1974) at 12-13 (CPR
App. 267-268).
*6 40 Fed. Reg. 4689 (Dec. 31, 1975).
** Letter from Monte Canfield, Jr., Director of GAO, to FTC
Chairman Engman (March 24, 1975) (CPR App. 778).
*” Meeting Notes (June 12, 1975) (CPR App. 984).
**FTC Resolution Authorizing and Directing the Collection of
Economic Reports (July 29, 1975) (CPR App. 299).
2°See FTC Order to File Special Report addressed to Allen-
Bradley Co. (July 29, 1975) (CPR App. 304).
*° FTC CPR Brief at 11.
14
sponded to each of the corporations’ objections in a letter
denying the motions to quash.”
II. Discussion
Enforcement actions were commenced in the District
Court against the companies that had refused to comply
with the Commission’s orders.” Dissatisfied in several re-
spects with the disposition rendered by the trial court, the
corporations perfected this appeal. Appellants contend first
that the orders in both the LB and CPR surveys were issued
in violation of the rulemaking requirements of the Admin-
istrative Procedure Act (APA).* Second, appellants urge
that the CPR survey is invalid because it violates the confi-
dentiality provisions of the Census Act.* Third, appellants
assert both substantive and procedural errors by the Dis-
trict Court in the enforcement proceeding.* Finally, appel-
lants submit that the LB orders are infirm because of the
alleged failure of the Comptroller General to review the
LB forms in accordance with the requirements of the Fed-
eral Reports Act.** We address each of these contentions
in turn.
A. Lawfulness of the FTC Report Orders.
1. Nonapplicability of the Administrative Procedure
Act’s Rulemaking Requirements.
The Federal Trade Commission Act (FTC Act) * pro-
vides a clear basis for authority for the Commission to is-
** Statement of the Commission, Motions to Quash, Corporate
Patterns Special Report (CPR App. 455).
*2 See note 1, supra.
*® See discussion in text infra at notes 37-55.
** See discussion in text infra at notes 56-86.
*§ See discussion in text infra at notes 89-143.
** See discussion in text infra at notes 144-159.
*715 U.S.C. §§ 41 et seg. (1976).
15
sue orders requiring corporations to submit informational
reports to the FTC. Section 6(b) of the Act states that the
Commission shall have the power
To require by general or special orders, persons,
partnerships, and corporations, engaged in or whose
business affects commerce, excepting banks and com-
mon carriers subject to the Act to regulate commerce
or any class of them or any of them, respectively, to
file with the Commission in such form as the Commis-
sion may prescribe annual or special, or both annual
and special, reports or answers in writing to specific
questions, furnishing to the Commission such informa-
tion as it may require as to the organization, business,
conduct, practices, management, and relation to other
corporations, partnerships, and individuals of the re-
spective persons, partnerships, and corporations filing
such reports or answers in writing.”
Appellants claim that the Commission’s exercise of this
authority, which they do not challenge,® in the development
and implementation of the Line of Business and Corporate
Patterns Report surveys was procedurally improper be-
cause the Commission failed to comply with the rulemaking
requirements of the Administrative Procedure Act.
Our first inquiry is whether the Federal Trade Commis-
sion Act obligates the Commission to observe APA rule-
making procedures when exercising its authority to require
8 Id. § 46(b).
*® During oral argument, counsel for appellants stated that the
corporations were not ‘‘faulting with the power’’ of the Commis-
sion to conduct the Line of Business and Corporate Patterns Re-
port surveys, but rather challenging only the alleged ‘‘ procedural
unfairness’’ of the way in which the Commission has exercised its
authority.
5 U.S.C. § 553 (1976).
16
informational reporting pursuant to Section 6(b) of the
FTC Act. We conclude that neither Section 6(b) nor any
other section of the FTC Act requires adherence to the
APA’s rulemaking procedures nor does any section of the
Act prescribe other procedural prerequisites to the exer-
cise of the Commission’s authority to require reporting.
Section 6(b) states that the Commission by order may re-
quire corporations ‘‘to file with the Commission in such
form as the Commission may prescribe . . . reports or
answers in writing to specific questions, furnishing the
Commission such information as it may require... .’’ *
This section assuredly imposes no procedural qualification
on the exercise of the Commission’s authority to gather
information. Section 6(g) of the FTC Act empowers the
Commission to make rules and regulations for the purpose
of carrying out the first eighteen sections of the Act.* But
this section does not require that the FTC engage in rule-
making to implement 6(b) or any other section.” Rather,
6(g) simply authorizes the Commission to promulgate rules
and regulations if it so desires. This is confirmed by the
fact that the first eighteen sections include the subpoena
authority of the FTC,** the exercise of which is not subject
to rulemaking requirements.** Hence, Section 6(g) in no
wise impugns the Commission’s prerogative to order re-
*' Supra note 38.
“15 U.S.C. § 46(g) (1976) provides that the Commission shall
have power ‘‘to make rules and regulations for the purpose of
carrying out the provisions of section 41 to 46 and 47 to 58 of
this title,’’
** See National Petroleum Refiners Ass’n v. FTC, 157 U.S. App.
D.C. 83, 88, 482 F.2d 672, 677 (1973), cert. denied, 415 U.S. 951,
94S. Ct. 1475, 39 L. Ed. 2d 567 (1974).
“15 U.S.C. §49(a) (1976).
cme e.g., FTC v. Lonning, 176 U.S.App.D.C. 200, 539 F.2d 202
).
Ape an
17
porting pursuant to Section 6(b) without preliminarily pur-
suing rulemaking procedures.*®
Similarly, the Administrative Procedure Act *’ does not
independently require rulemaking prior to the issuance of
FTC informational report orders. The language and legis-
lative history of the APA suggest a classification of agency
activity into three basic categories: rulemaking, adjudi-.
cation and investigation. The issuance of agency orders to
** Appellants rely heavily on the fact that the Securities and
Exchange Commission and the Federal Power Commission have
engaged in rulemaking in the development of information-gathering
programs as support for the claim that the Federal Trade Com-
mission should be required to conduct rulemaking proceedings prior
to implementation of the LB and CPR programs. In our view,
appellants’ reliance is misplaced. The statute enabling the SEC to
establish reporting requirements is substantially different from the
Federal Trade Commission’s governing legislation. The statutory
provisions empowering the SEC to impose reporting requirements
on corporations expressly provide that the SEC may do so only by
the promulgation of rules and regulations in accordance with the
Administrative Procedure Act. See, e.g., 15 U.S.C. §§ 77s(a), 78m
(a) (1976).
The Natural Gas Act authorizes the Federal Power Commission
to require natural gas companies to file annual or special reports
and, analogously to the FTC Act, does not expressly confine the
FPC’s information-gathering authority to the issuance of rules and
regulations. Rather, 15 U.S.C. § 717i(a) (1976) provides, in part,
that
[e]very natural-gas company shall file with the Commission
such annual and other periodic or special reports as the Com-
mission may by rules and regulations or order prescribe as
necessary or appropriate to assist the Commission in the proper
administration of this chapter.
Nonetheless, in a recent exercise of its power to require reporting,
the FPC elected to conduct rulemaking proceedings in accordance
with the requirements of the APA. See Union Oil Co. v. FPC, 542
F.2d 1036, 1040 (9th Cir. 1976). Thus appellants derive no support
from the examples of the SEC and FPC reporting programs.
*75 U.S.C. §§ 551 et seq. (1976).
18
compel the filing of informational reports was plainly re-
garded an investigative act by the drafters of the APA,
not a rule “ or adjudication. Congressman Walter a princi-
pal sponsor of the APA, described investigate activity in
“*We reject appellants’ argument that the LB and CPR pro-
grams fal] within the APA’s definition of a ‘‘rule,’’ 5 U.S.C.
§551(4) (1976), and are therefore subject to the APA’s rule-
making requirements, id. §§ 551(5), 553. The APA defines a ‘‘rule’’
as:
the whole or a part of an agency statement of general or
particular applicability and future effect designed to imple-
ment, interpret, or prescribe law or policy or describing the
organization, procedure, or practice requirements of an agency
and includes the approval or prescription for the future or
rates, wages, corporate or financial structures of reorganiza-
tions thereof, prices, facilities, appliances, services, or allow-
ances therefor or of valuations, costs, or accounting, or prac-
tices bearing on any of the foregoing.
Id. §551(4). Appellants make two arguments. First, appellants
maintain that since the LB and CPR data will be used for regula-
tory purposes, the collection of the data itself is a prescription of
law or policy within the meaning of the rule definition. We agree
with the District Court that appellants’ argument proves too much.
432 F. Supp. at 302. If the collection of information is considered
& prescription of law or policy because of the possible regulatory
uses to which the information may be put, then all types of com-
pulsory process the product of which may be put to regulatory
use—including subpoenas—would similarly require rulemaking.
Appellants’ second argument, which applies only to the LB
program, is that the LB reporting requirements constitute ‘‘ap-
proval or prescription for the future of . . . valuations, costs, or
accounting, or practices bearing on any of the foregoing’’ within
the terms of the APA’s rule definition. But as the District Court
determined, ‘‘the corporate parties can hardly claim that the
present orders have prescribed accounting methods, since the pres-
ent orders seek data from years past... .’’ 432 F. Supp. at 301.
Since the LB instructions allow corporations to provide estimates
or incomplete information when underlying data is unavailable,
the corporations cannot reasonably assert that they are unable to
satisfy the LB requirements under their current accounting and
To ee | a
19
the following terms during floor debate in the House of
Representatives:
The third type of administrative compulsory power
may be incidental to either legislative or judicial
powers of administrative agencies, or it may be en-
recordkeeping systems. Line of Business Form, Instructions, Gen-
eral at 2 (LB App. 749).
Appellants nevertheless contend that the LB program prescribes
accounting practices for the future because the ‘‘natural and prac-
tical results’’ of the reporting requirements will be transformations
of the corporations’ accounting and recordkeeping practices. Since
many corporations do not maintain finarcial records on the basis
of the market classifications used in the LB program, corporations
may decide to alter their future accounting practices to facilitate
potentially recurring LB reporting obiigations. But any adjust-
ment undertaken by the corporations will be entirely voluntary
and not at the express behest of the FTC. To the contrary, the
Line of Business Form Instructions state expressly that ‘‘ reporting
corporations need not develop new accounting systems or substan-
tially rework data processing procedures in order to complete the
LB Form”’ Id. Moreover, the decision of any company subject to
the LB orders to modify its accounting practice, .ovld most likely
be based upon the company’s prediction the: it w. subject to
substantially similar LB reporting requir - i» Suture years
and that an alteration in accounting met » ignificantly
ease the burden of compiling and certii es. See Evi-
dentiary Hearing Before the District ( _. «we District of
Columbia, June 16 and 17, 1977, Test*..ouy ‘of Howard Siers for
Dupont Company, Transcript at 71 (LB ‘pp. 1080) ; Testimony
of John Spellman for Grace Company, Transcript at 446, 361 (LB
App. 1320, 1335). Yet the Commission has made no final decision
to repeat the LB program in its present form on an annual basis,
although it has the authority to do so. In fact, the Commission has
indicated that it will reconsider the present market categories on
the basis of the data it receives from the first fully-enforced survey
and in light of the recently developed market classification guide-
lines of the Financial Accounting Standards Board, FTC Memo-
randum dated May 9, 1977, soliciting comments on revision of 1974
LB Form (LB App. 994). Accordingly, we conclude that neither
the LB program nor the CPR survey is embraced by the APA’s
definition of a ‘‘rule.’’
20
tirely independent of either. I refer to the compulsory
action of administrative agencies when they issue sub-
poenas, require records or reports, or undertake man-
datory inspections. These functions are investigative
in nature.”
Investigative acts, specifically including report orders, are
encompassed in Section 6(c) of the APA, which states
‘‘ process, requirement of a report, inspection, or other in-
vestigative act or demand may not be issued, made, or en-
forced except as authorized by law.’’® Section 6{c), then,
manifestly applies to the surveys in issue, which exact in-
formational reports from selected corporations. Thus, that
provisions’s limitation that investigative orders ‘‘may not
be issued, made, or enforced except as authorized by law’’
has direct bearing on this litigation. That phrase, however,
simply refers to the statute authorizing the activity. In this
case, the enabling statutory provision is Section 6(b) of
the FTC Act, which, as we demonstrated above, does not
impose rulemaking upon the FTC." Accordingly, the Com-
*° 92 Cong. Rec. 5648 (1948).
85 U.S.C. § 555(e) (1976).
5} Our view comports with the Commission’s interpretation of
the procedural requirements of the Federal Trade Commission Act
and the Administrative Procedure Act. The Commission has stated :
It has been the Commission’s long-standing interpretation of
the interrelationship of the APA and the FTC Act that the
Commission is not required to follow the APA procedures for
rulemaking when the Commission decides to use its powers
under Section 6, 15 U.S.C. § 46, or other provisions of the
FTC Act, to gather information or to investigate.
Statement of the Commission on Motions to Quash the Orders to
File the Line of Business Form at 11 (December 19, 1975) (LB
App. 888). Deference is due an agency’s interpretation of its own
mandate and, to a lesser extent, to its interpretation of the Admin-
istrative Procedure Act. International Telephone & Telegraph
Corp. v. Local 134, International Brotherhood of Electrical Work-
ers, 419 U.S. 428, 441, 95 S.Ct. 600, 609, 42 L.Ed.2d 558, 569
(1975).
a
21
mission is not obligated under the Administrative Pro-
cedure Act to pursue rulemaking proceedings prior to im-
plementation of the LB and CPR programs.
Our determination that these statistical surveys are in-
vestigative in character and therefore not subject to rule-
making procedures is buttressed by an earlier decision of
this court in Montship Lines, Ltd. v. Federal Maritime.
Board,” which held that notice and hearing was not a pre-
requisite to the issuance of an industry-wide order by the
Federal Maritime Board requiring the filing of statistical
reports. In the same vein, the Fifth Circuit, in United
States v. W. H. Hodges & Co.," rejected the argument that
the Secretary of Agriculture was subject to rulemaking
requirements in directing stockyard marketing agencies to
file special reports pursuant to a statutory authority that
incorporates Section 6(b) of the FTC Act. The Court
stated:
The order at issue here was clearly investigatory in
nature, as opposed to an adjudicatory or rulemaking
process, and hence not subject to the procedures gov-
erning rule-making outlined in the APA. Cf. Genuine
| Parts Co. v. F.T.C., 445 F.2d 1382, 1388 (5th Cir.
1971); K. Davis, Administrative Law Treatise, § 3.01
at 159, n.1 (1958)."
The LB and CPR surveys, too, are ‘‘clearly investigatory
in nature’’ and just as plainly exempt from the Admini-
strative Procedure Act’s compulsory rulemaking require-
ments."
® 111 U.S.App.D.C. 160, 295 F.2d 147 (1961).
58 533 F.2d 276 (5th Cir. 1976).
5 Td. at 278.
** Appellant corporations contend, nonetheless, that the Commis-
sion developed the Line of Business and Corporate Patterns Report
programs ‘‘behind closed doors’’ and in contravention of sound
22
2. Confidentiality Provisions of the Census Act.
We next consider whether the Corporate Patterns Report
program impermissibly affronts the Census Act.** Specific-
ally, appellants contend that the CPR survey violates the
confidentiality provision of the Census Act, which safe-
guards company-retained copies of census reports from
compelled disclosure to any government agency.” Appel-
lants insist that this provision protects not only the actual
file copy of the census report, but also the company’s sta-
tistical data that has been prepared in an assertedly
‘‘unique fashion’’ for the purpose of reporting to the
Census Bureau.” The corporations argue that the Census
Act’s protection of retained census report copies insulates
companies from any future requirement to respond to ques-
tions similar to those which the company has already an-
swered in reports to the Census Bureau. Since the CPR
public policy. Appellants’ characterization of the FTC’s procedure
finds no support in the record. The Commission provided substan-
tial opportunity for public input and made a conscientious effort to
be responsive to the numerous comments, complaints and criticisms
proffered by corporations, experts and other branches of the gov-
ernment. Although the corporations have not always approved of
the Commission’s resolution of their objections to the Line of Busi-
ness and Corporate Patterns Report surveys, appellants’ claim that
they have been denied an opportunity to present their views to the
Commission is, in our view, untenable. In any event, the Commis-
sion exercised its discretion to permit greater procedural access to
the decision-making process involved in developing the LB and
CPR programs than was required. See Vermont Yankee Nuclear
Power Corp. v. Natural Resources Defense Council, Inc., 46 U.S.
L.W. 4301, 4307 (Sup. Ct. April 3, 1977).
*° 13 U.S.C. §§ 1 et seq. (1976).
** Td. § 9(a) (3).
** Appellants seek to extend the Census Act’s protection to ‘‘sta-
tistical information specially prepared for and submitted to the
Census Bureau’’ that is ‘‘not prepared or maintained in the ordi-
nary course of business.’’ Joint Appellants’ CPR brief at 15-16.
23
survey includes a question essentially identical to an item
on the Census Bureau’s 1972 Annual Survey of Manufac
tures, appellants contend that the FTC is demanding in-
formation which the Census Act protects from compelled
disclosure.
Both the CPR survey and the 1972 Survey of Manufac-
tures require the respondent corporation to report the
value of shipments® from its domestic manufacturing
establishments during 1972 in terms of product categories
developed by the Census Bureau."* The Commission plans
to assess ‘‘the position of firms and of competitive condi-
tions in various product markets’’ by comparing the CPR
individual company value-of-shipments aggregates from
5° See note 63 infra.
*°** Value of shipments’’ is defined by the Census Bureau and
the FTC as ‘‘the value of products shipped for sale or transfer to
other plants of the company which were manufactured, fabricated,
processed or assembled’’ by the company. Census Instructions for
completing the Annual Survey of Manufactures Report, 1973 at 7
(CPR App. 386); FTC Reference List for use in completing the
Federal Trade Commission Corporate Patterns Report at 7-8 (CPR
App. 333-334).
*! Compare Item 9 of Ceneus Form MA-100 (1973) (CPR App.
381), with Item 5 of F7'C Form CPR-1, Corporate Patterns Report
for 1972 (CPR App. 305).
The product-class codes utilized in the CPR survey are the five-
digit codes developed by the Census Bureau in 1972 based on the
Standard Industrial Classification system. Census of Manufactures:
1972 Numerical List of Manufactured Products (New (1977) SIC
Basis). Series MC 72-1-12. The Annual Census of Manufactures
for 1972 required reporting on the basis of product-class codes
developed by the Census Bureau in 1967, Prior to publication of
the 1972 data, however, the Census Bureau converted the survey
results into the 1972 code classifications. The Census form for the
Annual Survey of Manufactures for 1973 was sent to companies
with each company’s value of shipments for 1972 converted into
the 1972 code classifications.
24
the Survey of Manufactures.” To maximize the compara-
tive value of the CPR information, the FTC has concededly
utilized definitions and product-class codes similar to those
employed by Census.”
The confidentiality provision of the Census Act upon
which appellants rely, Section 9(a)(3), is explicit in iden-
tifying the subject of its protection as ‘‘copies of census
reports which have been retained.’’™ It states that
[n]o department, bureau, agency, officer, or employee
of the Government, except the Secretary in carrying
out the purposes of this title, shall require, for any rea-
son, copies of census reports which have been retained
by any such establishment or individual. Copies of
census reports which have been so retained shall be
immune from legal process, and shall not, without the
consent of the individual or establishment concerned,
be admitted as evidence or used for any purpose in any
action, suit, or other judicial or administrative pro-
ceeding.”
* FTC Resolution Authorizing and Directing the Collection of
Economie Reports (Dec. 17, 1974) (CPR App. 254). See Comments
prepared by Commission’s Bureau of Economics staff on questions
raised by staff of the General Accounting Office and discussed at
meeting of March 11, 1975 (March 19, 1975) at 2 (CPR App. 283).
** FTC CPR Brief at 29. The inquiries are not identical in sev-
eral respects. The CPR survey requires reporting in terms of the
Census Bureau’s revised 1972 product codes, whereas reporting for
the Annual Survey of Manufactures for 1972 was done in terms of
the 1968 codes. See note 61 supra. Second, the CPR survey requires
total company value-of shipments data, whereas the Census Bureau
required reporting by individual establishment (plant). Finally,
the CPR form requires a certification of aceuracy and permits the
use of estimates only where the underlying data is unavailable.
(CPR App. 305). The census form permits the use of approxima-
tions and estimates which are ‘‘substantially accurate.’’ (CPR
App. 692).
* 13 U.S.C. § 9(a) (3) (1976).
* Id.
25
This language unambiguously protects actual file copies of
census reports retained by corporations. In fact, appellants’
construction extends so far beyond the statute’s plain terms
that we might fairly reject it without further inquiry. In
any event, an examination of the legislative history and
purpose of the confidentiality provision of the Census Act
equally belies appellants’ assertion that the FTC’s value-
of-shipments inquiry is a circumvention of the Census Act’s
intended protection.”
Section 9(a)(3) was added to the Census Act in 1962 °
in response to the Supreme Court’s holding in St. Regis
Paper Co. v. United States® that a company’s retained
copy of its census form was not immune from compulsory
disclosure to the Federal Trade Commission under the
then-existing confidentiality provision of the Census Act.
Prior to St. Regis, the Act’s immunity, which expressly
66 «« Where the language of an enactment is clear and construc-
tion according to its terms does not lead to absurd or impracticable
consequences, the words employed are to be taken as the final ex-
pression of the meaning intended. And in such cases legislative
history may not be used to support a construction that adds to or
takes from the significance of the words employed. But the reasons
for and the significant circumstances leading up to the enactment
may be noticed in confirmation of the meaning conveyed by the
words used.’’ (citations omitted) United States v. Missouri Pac.
RR. Co., 278 U.S. 269, 278, 49 S.Ct. 1383, 186, 73 L.Ed, 322, 376
(1929). See also Cass v. United States, 417 U.S. 72, 76-79, 94 S.Ct.
2167, 2169-2171, 40 L.Ed.2d 668, 672-674 (1974); United States
v. Oregon, 366 U.S. 643, 648, 81 S.Ct. 1278, 1281, 6 L.Ed.2d 575,
579 (1961) ; Caminetti v. United States, 242 U.S. 470, 484, 37 S.Ct.
192, 194, 61 L.Ed, 442, 452 (1917); March v. United States, 165
U.S.App.D.C, 267, 274-275, 506 F.2d 1306, 1313-1314 (1974) ; see
generally 2A C.D, Sanvs, SuTHERLAND STaTuTES AND STATUTORY
Construction, (4th ed. 1973) ch. 46, p. 48-68; Murphy, Old
Maxims Never Die: the ‘‘Plain-Meaning Rule’’ and Statutory In-
terpretation in the ‘‘Modern’’ Federal Courts, 75 Col. L. Rev. 1299
(1975).
** Pub. L. No. 87-813, 76 Stat. 922 (1962).
** 368 U.S. 208, 82 St.Ct. 289, 7 L.Ed.2d 240 (1961).
26
applied only to census reports in the hands of the Census
Bureau,” had been construed by some lower federal courts
to apply with equal force to the company’s retained copy.”
The Census Bureau had encouraged companies to preserve
copies of their census reports in order to facilitate con-
sistency in their reporting from year to year, and had ex-
** Prior to the 1962 amendment, the confidentiality provision of
the Census Act stated:
(a) Neither the Secretary, nor any other officer or empolyee
of the Department of Commerce or bureau or agency thereof,
may, except as provided in section 8 of this title—
(1) use the information furnished under the provisions of
this title for any purpose other than the statistical purposes
for which it is supplied, or
(2) make any publication whereby the data furnished by
any particular establishment or individual under this title
can be identified ; or
(3) permit anyone other than the sworn officers and em-
ployees of the Department or bureau or agency thereof to
examine the individual reports. 68 Stat. 1013 (1954).
7 The decisions interpreting the scope of the Census Act’s con-
fidentiality protection prior to 1962 consistently held that the actual
forms submitted to the Census Bureau were protected from dis-
closure. United States v. Bethlehem Steel Corp., 21 F.R.D. 568
(S.D.N.Y. 1958) (Census prohibited from releasing to antitrust
defendant reports filed by competitors); Federal Trade Commis-
sion v. Orton, 175 F.Supp. 77 (S.D.N.Y. 1959) (FTC barred from
subpoenaing schedules filed with Census Bureau).
The scope of the confidentiality provisions of the unamended
Census Act in protecting the copies of the census form retained in
the corporate files was the subject of disagreement among the
federal courts. The Seventh Circuit in FTC v. Dilger, 276 F.2d
739 (7th Cir.), cert. denied, 364 U.S. 882, 81 S.Ct. 171, 5 L.Ed.2d
104 (1960), held that the retained copies did come within the pur-
view of the Act. The Second Circuit, however, held that the
company was not required to retain a copy of their filed report and
that the retained file copies were therefore not secure from com-
pelled disclosure. St. Regis Paper Co. v. United States, 285 F.2d
607 (2d Cir. 1960), aff’d, 368 U.S. 208, 82 S.Ct. 289, 7 L..Fd.2d 240
(1961).
27
pressly assured corporations that their reports would not
be used ‘‘for purposes of taxation, investigation or regula-
tion.’’"* The Supreme Court in St. Regis held that the
Census Bureau’s promises could not be enforced without
rewriting the Act to protect the company’s retained copy
of their report—a task for Congress and not the Court.”
In the wake of the St. Regis decision, and at the request
of the Commerce Department,” Congress moved promptly
to enact legislation ‘‘clarifying the intent of the Census
Act.””"* In so doing, the legislative history reveals, Con-
gress sought to accommodate both the interest of the
Census Bureau in protecting the file copies of respondents’
reports and the interest of the federal regulatory agencies
in collecting information needed for regulatory purposes.”
The House committee considering the amendment speci-
fically rejected language that would have made census ‘‘in-
formation, reports and other data’’ immune from legal pro-
cess, thus clearly undermining appellants’ assertion that
Congress conferred such broad protection.” In its stead,
Congress enacted a provision protecting only ‘‘copies of
" St. Regis Paper Co. v. United States, supra note 70, 368 U.S.
at 216, 82 S.Ct. at 294, 7 L.Ed.2d at 247.
"* Id. at 218, 82 S.Ct. at 295, 7 L.Ed.2d at 248.
_™S. Rep. No. 2218, 87th Cong., 2d Sess. (1962) (hereinafter
cited as Senate Report) (CPR App. 657).
** H.R. Rep. No, 2437, 87th Cong., 2d Sess. 2 (1962) (hereinavter
cited as House Report) (CPR App. 645); Senate Report, supra
note 73, at 2 (CPR App. 658).
"® Moreover, the express provision of the Census Act requires
accommodation of the interest of the federal agencies in gathering
information. 13 U.S.C. § 182 (1976), states that ‘‘nothing in this
title shal] be deemed to revoke or impair the authority of any other
Federal Agency with respect to the collection or release of infor-
mation.’’
** House Report, supra note 74, at 1 (CPR App. 644).
28
census reports which have been retained.’’” In determin-
ing not to immunize a company’s census ‘‘data’’ and ‘‘in-
formation’’ from disclosure, the committee accepted the
recommendation of the administration presented in a letter
from the Bureau of the Budget included in the House
report:
[Clare must be taken not to extend confidentiality
to such an extent as to interfere unduly with responsi-
bilities of other agencies of Government in carrying
out functions which require information. These include
the antitrust acts and other regulatory acts.... [T]he
protection to the respondent’s file copy of the-census
reports should apply only to the file copy and not to the
information itself or to other records and documents
of the company .... [A]ny extension of confidentiality
beyond the census copy would be strongly opposed by
the administration. .. .”
In addition, both the House and Senate reports include a
letter from the Commerce Department favoring the restric-
tion of the amendment’s immunity to actual file copies and
interpreting the impact that the limited protection would
have on the ability of regulatory agencies to collect infor-
mation. It stated:
[T]he ability of a regulatory agency to formulate in-
quiries, even one identical with those asked by Census,
would not be affected. The only restriction would be
that the inquiry would not demand an answer by defi-
Td.
™® House Report, supra note 74, at 5 (CPR App. 648). See Hear-
ings on Confidentiality of Census Reports Before the House Comm.
on Post Office and Civil Service, 87th Cong., 2d Sess. (1962)
(hereinafter cited as Census Hearings) at 27.
29
nition identical with that furnished the Census Bureau
in another context and for another purpose.”
This distinction between a regulatory agency asking a
question identical to that posed by the Census Bureau,
which the FTC concedes it is doing,® and requiring an
identical answer, which the FTC is not doing, is important,
for it goes to the very purpose of affording immunity ©
census reports and their copies.
The legislative history of the 1962 amendment indicates
two reasons why confidentiality was considered essential to
candid and expeditious census reporting. First, in order to
encourage prompt replies to Census questionnaires, com-
panies are implored by the Bureau to ‘‘authorize subordi-
nate officials to furnish information directly, without time-
consuming formal clearance by comptrollers, auditors, or
legal counsel concerned with problems other than statistica}
reporting.’’** Second, due to the differences in corporate
accounting practices and the unavailability of final data at
the time census reports are made, respondents are encour-
aged to use estimates and approximations.” Since a com-
pany’s unreviewed, estimated or preliminary answers to
the Census Bureau might not be suitable for submission to
regulatory agencies for uses potentially detrimental to the
corporation, the Census Bureau must be able to assure re-
*® House Repori, supra note 74, at 7 (CPR App. 650); Senate
Report, supra note 73, at 4 (CPR App. 660). See also Statement
of Walter Ryan, Acting Chief, Office of Statistical Standards,
Bureau of the Budget, Census Hearings, supra note 78, at 15.
8° See note 72, supra.
*! Letter from Luther H. Hodges, Secretary of Commerce, to
Tom Murray, Chairman, Comm. on Post Office and Civil Service,
House of Representatives (July 19, 1962); House Report, supra
note 74, at 6 (CPR App. 649) Senate Report, supra note 73, at 3
(CPR App. 659).
83 Td.
30
spondents that they will not be required to provide another
agency with answers necessarily identical to those given
to the Census Bureau.”
The CPR survey, by presenting a question essentially
identical to the Census inquiry with respect to value of
shipments, does not ‘‘demand an answer by definition iden-
tical with that furnished the Census Bureau.’’™ Simply
put, the corporation is under no compulsion to supply the
FTC with the same answer reported to Census, although
it is certainly at liberty to do so. While some corporations
may use their census figures directly in responding to the
CPR questionnaire, other corporations, by their own affi-
davits, have indicated that tie unreviewed answers to the
census inquiry are not sufficienily reliable for the certifica-
tion of truthfulness required of their answers to the Fed-
eral Trade Commission.** These latter appellants would
not be inhibited in any respect from amending their census
responses so as to effect full and well-considered compli-
** See Ryan Statement, Census Hearings, supra note 78, at 17;
Chamber of Commerce Statement, Census Hearings at 3; Federated
Department Stores Statement, Census Hearings at 51; National
Ass’n of Manufacturers Statement, Census Hearings at 62. See
generally Note, The Required Report Privileges, 56 Nw.U.L.Rev.
283, 293 (1961).
** Supra note 79.
*° See Statement of the Commission, Motions to Quash, Corporate
Patterns Special Report at 13 (CPR App. 467) ; Letter from C.A.
Tobin, Secretary to the FTC, ‘‘To Whom This May Concern’’
(Feb. 13, 1976) (CPR App. 335); Hearings on Departments of
State, Justice, and Commerce, the Judiciary, and Related Agencies
Appropriations For Fiscal Year 1977 Before the Senate Subecomm.
on Appropriations, 94th Cong., 2d Sess. (1976) at 142-143 (CPR
App. 617-18).
** Affidavit of Cargill, Inc. at 4-7 (CPR App. 723-726) ; Affidavit
of Northwest Industries, Inc. at 3 (CPR App. 740); Affidavit of
Goodyear Tire & Rubber Co. at 2-3 (CPR App. 733-734).
31
ance with the demands of the CPR program. It follows,
then, that by merely including in the Corporate Patterns
Report form a question similar to the inquiry made by the
Census Bureau in the Survey of Manufactures, the Com-
mission has not occasioned a breach of the Census Act’s
rigorous but carefully delineated assurance of confiden-
tiality.
B. Judicial Enforcement of FTC Informational Report
Orders.
1. The Applicable Standards of Review.
Section 9 of the Federal Trade Commission Act ™ vests
jurisdiction in the district courts to command compliance,
by mandamus, with FTC informational report orders issued
pursuant to Section 6(b) of the FTC Act.™ Prior to com-
manding compliance with the LB and CPR orders, the Dis-
trict Court reviewed these FTC programs under the criteria
and summary procedures applicable to judicial enforcement
of compulsory process by administrative agencies set forth
by the Supreme Court in United States v. Morton Salt
Co.,” and by this court in FTC v. Texaco, Inc.® Appellants
contend that a higher standard of review and a plenary
review preceeding was required on the theory that the LB
and CPR programs are ‘‘agency action’’ subject to the
arbitrary and capricious standard of Section 706(2) of the
*7 15 U.S.C. § 49 (1976), which states, in part, that ‘‘the district
courts of the United States shall have jurisdiction to issue writs of
mandamus commanding any person, partnership, or corporation to
comply with the provisions of this subchapter or any order of the
Commission made in pursuance thereof.’’
8° 15 U.S.C. § 46(b) (1976).
8° 338 U.S. 632, 70 S.Ct. 357, 94 L.Ed. 401 (1950).
°° 180 U.S.App.D.C. 390, 555 F.2d 862 (en bane), cert. denied,
431 U.S. 974, 97 S.Ct. 2939, 53 L.Ed.2d 1072 (1977). See 432 F.
Supp. at 313-316 for the District Court’s analysis.
32
Administrative Procedure Act." We reject this argument
because in our view the limited scope of review found by
the Supreme Court and this court to be appropriate for
compulsory process enforcement is applicable to enforce-
ment of the Section 6(b) report orders being enforced in
this proceeding.
In United States v. Morton Salt Co. the Supreme Court
reviewed Federal Trade Commission orders requiring salt
producers to file informational reports designed to deter-
mine whether these corporations were complying with a
5 U.S.C. § 706(2) (1976). The District Court solicited supple-
mental memoranda on the agency action issue, and concluded that
the LB and CPR programs are not ‘‘agency action’’ within the
meaning of Section 706(2), and even if so considered, are not
arbitrary, capricious, and abuse of discretion, or otherwise not in
conformance with the standards of this Seetion. 1977-2 Trade Cas.
at 72,143-72,146. As the District Court stated,
The court has a limited role to play, however, in reviewing
agency action to determine whether it is arbitrary or capri-
cious. This court cannot merely substitute its judgment for
that of the agency. Citizens to Preserve Overton Park, Inc. v.
Volpe, 401 U.S, 402, 416 (1971). Rather, after a searching
and careful inquiry, the court should determine whether the
decision is based on a consideration of the relevant factors and
whether there has been a clear error of judgment.
Id. at 72, 146. We agree with the District Court that the record of
the administrative consideration of the LB and CPR programs
reflects an extensive consideration of the problems posed by the
development of these surveys. In addition, we reject as frivolous
appellants’ assertion that the District Court’s ruling was proce-
durally deficient because it ruled on appellants’ challenge to the
composition of the administrative record at the same time it rejected
appellants’ claim of arbitrary and capricious agency action. Since
the District Court rejected appellants’ claim that the administra-
tive record was incomplete, there was no change in the composition
of the record which could possibly have prejudiced appellants in
their ability to present their arguments with respect to the agency
action issue.
*? Supra note 89.
33
court order to cease and desist certain unfair trade prac-
tices. These FTC orders were issued pursuant to Section
6(b) of. the Federal Trade Commission Act, the same
authority invoked by the Commission here. Appellants,
nevertheless, would have us find Morton Salt inapposite
because the report orders in Morton Salt were part of a
focused FTC investigation, whereas the LB and CPR or-
ders are incident to general statistical surveys. The FTC’s
authority to require reports under Section 6(b) is not
limited to pursuing a focused theory of unlawful activity.
The Supreme Court in Morton Salt discussed the nature
and scope of this authority in some detail.
The only power that is involved here is the power to
get information from those who best can give it and
who are most interested in not doing so. Because judi-
cial power is reluctant if not unable to summon evi-
dence until it is shown to be relevant to issues in litiga-
tion, it does not follow that an administrative agency
charged with seeing that the laws are enforced may
not have and exercise powers of original inquiry. It
has a power of inquisition, if one chooses to call it
that, which is not derived from the judicial function.
It is more analogous to the Grand Jury, which does not
depend on a case or controversy for power to get evi-
dence but can investigate merely on suspicion that the
law is being violated, or even just because it wants
assurance that it is not.*
The Court went on to state that the purpose of the investi-
gation may be nothing more than to satisfy ‘official
curiosity,’’ because ‘‘law enforcing agencies have a legiti-
mate right to satisfy themselves that corporate behavior is
consistent with the law and the public interest.’’ * Indeed,
* Id. at 642-643, 70 S.Ct. at 363-364, 94 L.Ed. at 410-411.
* Td.
34
as we noted in FTV v. Texaco, Inc., the investigative power
of the Commission may be used to reveal the need for
changes in the law for the purpose of making recommenda-
tions to Congress.** The Commission’s purpose in conduct-
ing the LB and CPR surveys falls clearly within the pur-
view of its broad investigative powers under Section 6(b).
The objective of the Line of Business program is described
in the following Commission statement:
[T]he Federal Trade Commission has made a vigorous
effort in recent years to improve the effectiveness of
its law enforcement resources allocations for antitrust
and consumer protection. One consequence has been a
shift toward investigations and cases which are indus-
try-wide in scope. To choose as wisely as possible
which industry-wide investigations best serve the pub-
lic interest, accurate industry-by-industry performance
information is needed. The Commission’s efforts in
this respect have been hampered by the decline over
time in the quality of the information available. The
Line of Business program was conceived to help fill
those information needs.”
Similarly, the Commission states that the CPR data banks
will be used for ‘‘enforcement efforts, economic studies,
and policy planning activities.’’*’ Thus, as to both pro-
grams, the FTC seeks to establish data banks for use in
targeting areas for investigating and enforcement efforts.
Although the investigative powers of the regulatory
agencies are broad, they are not unlimited, and are subject
to judicial review “[t]o protect against mistaken or arbi-
*° 15 U.S.C. § 49 (1976). See FTC v. Texaco, Inc., supra note 90,
180 U.S.App.D.C. at 403 n.28, 555 F.2d 875 n.28.
**LB Supporting Statement, supra note 6, at 2 (LB App. 717).
* CPR Supporting Statement, supra note 19, at 2 (CPR App.
257).
35
trary orders.’’* As we stated in Texaco, however, ‘‘while
the court’s function is ‘neither minor nor ministerial,’
Oklahoma Press Publishing Co. v. Walling, 327 U.S. at
217 n.57, the scope of issues which may be litigated in an
enforcement proceeding must be narrow, because of the
important governmental interest in the expeditious investi-
gation of possible unlawful activity.’’** The agency’s in-
vestigative order, whether it is a subpoena or an informa,
tion-report order, must be enforced if it does not transcend
the agency’s investigatory power, the demand is not un-
duly burdensome or too indefinite, and the information
sought is reusonably relevant.
2. The Relevance and Burdensomeness Determinations.
The corporate appellants argue that if the FTC report
orders are summarily enforceable as ordinary compulsory
process, as we have concluded they are, the District Court
erred in evaluating the relevance and burdensomeness of
the Line of Business orders.’ We understand appellants
to make three claims. First, that the District Court failed
to determine that the LB data sought was relevant to the
agency’s general purpose as required by Texaco. Second,
that it was error for the District Court to decide the ques-
tion of burdensomeness on the basis of five corporate affi-
davits and the testimony of two corporate witnesses. And
finally, that the Court erred in considering relevance and
burdensomeness independently.
As recognized in Texaco, relevance is to be measured
against the agency’s general purpose in gathering the in-
** United States v. Morton Salt Co., supra note 89, 338 U.S. at
640, 70 S.Ct. at 362-363, 94 L.Ed. at 409.
*° Supra note 90, 180 U.S.App.D.C. at 400, 555 F.2d at 872.
7° Appellants do not raise this objection in connection with the
District Court’s enforcement of the Corporate Patterns Report
orders.
36
vestigative material.” The District Court found that ‘‘the
record in this action provides an ample basis for drawing
the limited conclusion, without further evidentiary hearing,
that the data sought in the LB program is not totally use-
less... .’’ ** If anything, the District Court was too guarded
in its assessment of the relevance of the LB data. Indeed,
in our review, the record reflects that the Line of Business
data sought is reasonably relevant to the Commission’s
general purpose of collecting corporate financial informa-
tion in order to assess industry-by-industry performance
and market structure.’** As we are assured that the FTC
surveys satisfy this degree of relevance, we need not decide
if a lesser standard would suffice.
The next question is whether the District Court abused
its discretion in determining that the Line of Business re-
porting requirements do not impose an undue burden on
the respondent corporations.’* As we indicated in Tewxaco,
the onus of demonstrating that a request is unduly burden-
some is the corporation’s.’** When the inquiry is conducted
1 Supra note 90, 180 U.S.App.D.C. at 402, 565 F.2d at 874.
102 1977-2 Trade Cas, at 72,146.
8 The critics of the LB program and the FTC agree that the
design of the LB survey and the definition of market categories
are not perfectly suited for collecting data that will infallibly
reflect market conditions. But we do not hold the FTC to a stand-
ard of perfection in assessing the relevance of their effort. The com-
plex problems of designing this type of statistical program have
been and will continue to be the focus of extensive efforts by the
Commission to improve the survey. In the meantime, it is not dis-
puted that the LB data that the FTC receives will be the only
corporate financial performance data available in terms of uniform
market categories. We defer to the Commission’s expertise in con-
cluding that this information is necessary and useful to perform-
ance of its regulatory responsibilities.
1* See FTC v. Texaco, Inc., supra note 90, 180 U.S.App.D.C. at
409 & n.45, 555 F.2d at 881 & n.45.
= 36.
37
pursuant to a lawful purpose and the request is relevant
to that objective, its reasonableness will be presumed ab-
sent a showing that compliance threatens to disrupt or un-
duly hinder the normal operations of a buciness.’* Con-
cerned that the administrative record was insufficient to
permit resolution of the question of burdensomeness, and
in view of the corporations’ representations that they might
lay an adequate evidentiary foundation with financial pres-
entations from a ‘‘small number’’ of their group, the Dis-
trict Court invited the corporate parties to submit five affi-
davits on the cost of compliance with each of the two re-
porting programs.’” In addition, a hearing was held at
which all of the affiants were summoned to present oral
testimony.’ The District Court concluded that, assuming
the accuracy of the most extravagant cost estimates, the
costs of compliance were de minimis relative to the overall
corporate operating budgets.** We think that under the
circumstances appellants were extended ample opportunity
to establish their claims of burdensomeness, and we are
unable to perceive any error in the District Court’s assess-
ment of the inadequacy of their showing in that regard.
Finally, appellants have failed to persuade us that the
District Court erred in its refusal to disregard the long
108 Td. at 410, 555 F.2d at 882.
107 432 F.Supp. at 315 & n.61. The corporations chose not to file
affidavits with respect to the cost of complying with the CPR
orders, 1977-2 Trade Cas, at 72,148.
108 1977-2 Trade Cas. at 72,148. Although all five affiants were
invited to present oral testimony, the corporations elected to present
only two.
10° 1977-2 Trade Cas. at 72,151-72,152 (Findings of Fact {[ 15).
38
and consistent line of authority supporting independent
consideration of relevance and burdensomeness.’”
3. Enforcement Procedures.
The corporations further argue that enforcement of the
FTOC’s report orders by summary mandamus procedures
violates Federal Rules of Civil Procedure 81(a)(3) and
81(b), which, they contend, require full compliance with the
federal rules, including commencement of suit by the filing
of a complaint and the issuance of a summons in a plenary
proceeding.”
Rule 81(b) abolishes the writ of mandamus and provides
that relief in the nature of mandamus may be obtained ‘‘ by
110 T.y., United States v. Morton Salt Co., supra note 89; Okla-
homa Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494,
90 L.Ed. 614 (1946) ; FTC v. Texaco, Inc., supra note 90.
The single statement of the Fifth Circuit in Genuine Parts Co.
v. FTC, 445 F.2d 1382, 1891 (5th Cir. 1971), that the burden of
compliance was particularly reasonable in light of the fact that the
portion of the order objected. to was ‘‘the very heart of the in-
quiry,’’ does not suggest to us a change from the traditional bifur-
cated analysis,
11 Appellants have filed a supplemental brief advancing the argu-
ment that as a result of the FTC’s filing a petition instead of a
complaint in the District Court, ‘‘the district court never obtained
subject matter jurisdiction and its final order granting mandatory
relief is a nullity.’’
Brief by Goodyear Tire, et al. at 14. This argument is totally
lacking in merit. The Supreme Court has stated :
We think so long as the court’s subject-matter jurisdiction
actually existed and adequately appeared to exist from the
papers filed, . . . any defect in the manner in which the
action was instituted and processed is not itself jurisdictional
and does not prevent entry of a valid judgment. See 2 J.
Moore, Federal Practice [ 3.06[1], pp. 731-732 (2d ed. 1974).
Schlesinger v. Councilman, 420 U.S. 738, 742 n.5, 95 S.Ct. 1300,
1306 n.5, 43 L.Ed.2d 591, 599 n.5 (1975).
39
appropriate action or by appropriate motion.’’ *” It is clear
that the substitution of motion and action practice for writ
practice has not abolished the remedy of mandamus.”
Appellants contend, however, that Rule 81(a)(3),"* which
permits district courts to deviate from the rules in sub-
poena enforcement cases, compels by implication full appli-
cation of the rules in other types of mandamus proceed-
ings. The Notes of the Advisory Committee belie appel-
lants’ suggestion that this rule was intended to create only
a narrow exception to the comprehensive application of
the rules in mandamus proceedings. The Committee stated
that ‘‘although the provision allows full recognition of the
fact that the rigid application of the rules in the proceed-
ings themselves may conflict with the summary determina-
tion desired [citations omitted], it is drawn so as to permit
application whenever the district court deems them use-
ful.” “* Moreover, the decided cases are contrary to appel-
lants’ position. The District Court,”* in rejecting the cor-
porations’ argument, followed the line of decisions in this
12 Wed, R. Civ. P. 81(b) states:
(b) Scire Facias and Mandamus. The writs of scire facias
and mandamus are abolished. Relief heretofore available by
mandamus or scire facias may be obtained by appropriate
action or by appropriate motion under the practice prescribed
in these rules.
oi | J. Moore, Feperat Practice f[ 81.07, at 81-96 (2d ed. 1975).
14 Fed. R. Civ. P. 81(a) (3) provides, in pertinent part:
These rules apply to proceedings to compel the giving of testi-
mony or production of documents in accordance with a sub-
poena issued by an officer or agency of the United States under
any statute of the United States except as otherwise provided
by statute or by rules of the district court or by order of the
court in the proceedings.
118 See Notes of Advisory Committee on Rules, Fed. R. Civ. P.
81, 28 U.S.C.A. Rule 81 at 30-31 (1960).
16 432 F.Supp. at 280-283.
40
jurisdiction *’ endorsing the position first delineated in
United States v. Associated Merchandising Corp.:
As a general rule, district courts do not issue direc-
tions in the nature of mandamus except in aid of juris-
diction already acquired. ... However, where the Court
was able to discover a congressional authorization for
use of a writ of mandamus, it approved the issuance
upon a petition of a peremptory writ. [citations omit-
ted] By [Section 9 of the FTC Act] Congress has ex-
pressly conferred jurisdiction to issue a writ of man-
damus. Therefore, it seems clear that Congress has
expressly authorized the court to proceed summarily
to enforce orders of the Federal Trade Commission
for the production of documents.'*
We find the very thin thread of logic offered by appellants
insufficient to support their argument that summary man-
damus enforcement proceedings for FTC report orders is
prohibited by unyielding adherence to the Federal Rules
of Civil Procedure.
4, Confidentiality Claims.
Appellants ask to be excused from complying with the
LB and CPR orders because of potential jeopardy to confi-
dential information sought by the Commission if LB and
CPR data or data aggregates are published.””® The District
117 Emerson Electric Co. v. FTC, Mise. No. 76-0002 (D.D.C. July
21, 1976); FTC v. Jorgensen, Mise. No. 75-46 (D.D.C, May 16,
1975); FTC v. Sherry, 1969 Trade Cas. 87,452 (D.D.C. 1969).
118 256 F.Supp. 318, 321 (S.D.N.Y. 1966).
915 U.S.C. §46(g) (1976) states that the Commission shall
have the power
{t]o make public from time to time such portions of the infor-
mation 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 Con-
41 .
Court held that appellants’ confidentiality claims are pre-
mature prior to a final Commission decision to publish the
data from these surveys and are improperly presented to
the Court prior to exhaustion of administrative remedies.!”
Moreover, as noted by the District Court, even if appel-
lants’ claims were meritorious, they would not excuse com-
pliance with the Commission order to supply information
to the agency.’ To ensure efficacious assertion of future.
claims with respect to the release of CPR data, the District
Court issued a protective order obligating the FTC to pro-
vide ten days notice to companies prior to publication of
CPR data for which confidential treatment had been re-
quested and denied.’” No protective order was issued with
regard to the Line of Business data. We uphold the District
Court in all respects. :
Relying on the Supreme Court’s opinion in FTC vy.
Schreiber,’* this court stated recently in FTV v. Texaco,
Inc. that ‘‘it is the agencies, not the courts, which should,
in the first instance, establish the procedures for safeguard-
ing confidentiality.’’ ‘** In light of this principle, we noted
as a general rule that until the subpoenaed information
has been tendered to the agency and it has had the oppor-
tunity to rule on specific requests for confidential treat-
gress and io 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.
120 1977-2 Trade Cas, at 72,146 n.7; 432 F.Supp. at 311-312.
#1 See Electric Bond Co. v. SEC, 303 U.S. 419, 438, 58 S.Ct.
678, 685, 82 L.Ed. 936, 946 (1938).
2 July 11, 1977 order (LB App. 269).
128 381 U.S. 279, 85 S.Ct, 1459, 14 L.Ed.2d 383 (1965).
124 Supra note 90, 180 U.S.App.D.C. at 412 n.62, 555 F.2d at
884 n. 62. See also Myers v. Bethlehem Shipbuilding Corp., 303
U.S. 41, 50-51, 58 S.Ct. 459, 463-464, 82 L.Ed. 638, 643-644 (1938).
42
ment, broad protective orders are ‘‘premature and im-
proper.’’
Appellants contend that if the Commission decides to
publish aggregate Line of Business statistics that these
figures may be subject to disaggregation, thereby revealing
confidential individual company data. This argument is pre-
mature and improper for several reasons. First, the Com-
mission has already promulgated regulations to ensure the
confidential treatment of the 1974 Line of Business infor-
mation.’** They provide, in part, that the UB data shall be
used only to compile statistical reports.’*’ In addition, the
FTC is required by its regulations to compile these reports
in a fashion that precludes identification of individual
company data.’ The regulations further direct the Com-
mission to develop procedures sufficient to prevent impro-
per disclosure of LB data supplied by a particular report-
ing company.’” Appellants assertion that their individual
LB data will be identifiable if LB aggregates are made pub-
lic assumes that the FTC will forsake its own regulations.
128 FTC v. Texaco, Inc., supra note 90, 180 U.S.App.D.C. at 412,
555 F.2d at 884.
126 Td.
27 Confidentiality Rules and Procedures for the 1974 Reporting
Year, 40 Fed. Reg. 42243 (1975) (LB App. 710).
128 Td.
2° Td. In addition, the publication or release of any data submit-
ted to the FTC is subject to a number of statutes. The FTC Act,
15 U.S.C. § 46(f) (1976), prohibits the Commission from publish-
ing trade secrets obtained in its information-gathering activities.
It is a criminal offense for any Commission employee to make
public any confidential information obtained by the Commission,
15 U.S.C. § 50 (1976) ; 18 U.S.C. § 1905 (1976). For discussion of
precautions taken to ensure the security of LB data, see Hearings
on Appropriations for the Department of State, Justice and Com-
merce, the Judiciary, and Related Agencies for 1977 Before a
Subeomm, of the Senate Comm. on Appropriations, 94th Cong.,
2d Sess., pt. 4, at 128-130 (1976).
43
We reject this contention as contrary to the well-established
presumption of administrative regularity.
Second, the Commission has invited reporting companies
to lodge with their LB reports special requests indicating
why their reported data may be especially vulnerable to
identification if included in published aggregates.** Ap-
pellants must first exhaust their administrative avenues for
relief before resorting to the courts for their remedy.’
In light of the numerous administrative safeguards and
avenues for relief, we conclude that a protective order is
unnecessary and was properly denied by the District Court
with respect to the Line of Business program.
In the CPR appeal, appellants contend that the CPR
data constitutes ‘‘trade secrets’? barred from publication
by Section 6(f) of the FTC Act.*** The District Court
properly concluded that it was premature to reach the
merits of appellants’ trade secret claim because the Com-
mission has made no final decision to publish individual
CPR data.’ Furthermore, as with the claims of confiden-
tiality of the LB data, appellants may demonstrate to the
FTC that their CPR data requires special protection and
upon receipt of the CPR data, the Commission may rule
favorably on particular pleas for confidential treatment.
Since the CPR appellants’ claims involve the potential re-
lease of their individual company data, the District Court
decided that a protective order was appropriate ‘‘[i]n
order to protect the corporate parties from any precipitous
action on the part of the FTC’’ before appellants could ex-
189 Statement of the Commission on Motions to Quash the Orders
to file the 1974 Line of Business Form at 10 (LB App. 887);
Statement of the Commission (on renewed motions to quash) at 4
(LB App. 558).
181 See note 124, supra.
8215 U.S.C. § 46(f) (1976).
133 432 F.Supp. at 311-312.
44
haust their administrative remedies.** The District Court’s
order——much like the one issued by this court in Texaco**—
requires the Commission to furnish ten days notice of a
decision to publish individual company data.’ Although
we stated expressly in Texaco that such an order is not
required as a general rule, we think the District Court’s
issuance of a protective order under the circumstances at
bar was well within its discretion.’” In sum, the trial court’s
disposition of the CPR appellants’ trade secrets claim was
unimpeachable in all respects.
5. Claims of the Adjudicative Appellants.
Nine of the appellant corporations who are respondents
in adjudicative proceedings styled In the Matter of Exxon
Corporation, et al. and In the Matter of Kellogg Co., et al.
84 Td. at 312,
8° 180 U.S.App.D.C. at 412, 555 F.2d at 884.
8° Supra note 130.
87 180 U.S.App.D.C. at 412 n.64, 555 F.2d at 884 n.64,
Appellants Miliken & Company and Allen-Bradley Company
have filed a supplemental brief asserting their special interest in
the asserted failure of the Commission and the District Court to
protect adequately the confidentiality of the LB and CPR data.
These privately-held companies aver that the danger of disclosure
of their financial data is especially grave because they are not
subject to the SEC’s reporting requirements applicable to public
corporations, While there may be a unique facet to the confiden-
tiality claims of the nonpublic corporations subject to the FTC
surveys, these claims, like the confidentiality claims of the other
appellant corporations, are nevertheless premature and without
merit in this litigation.
** Atlantic Richfield Company, Exxon Corporation, Gulf Oil
Corporation, Mobil Oil Corporation, Shell Oil Company, Standard
Oil of California, Standard Oil Company (Indiana) and Texaco,
Inc. are respondents in In the Matter of Exxon Corporation, et al.,
FTC Docket 8934. General Mills, Inc. is a respondent in In the
Matter of Keilogg Company, et al., FTC Docket 8883.
45
(hereinafter, adjudicative appellants or adjudicative corp-
orations) raise separate claims of error with respect to the
possible use of the LB and CPR data by the Commission’s
complaint counsel in those proceedings. The corporations’
underlying assertion is that complaint counsel might ob-
tain the LB and CPR data for use in the adjudications
without complying with the Commission’s discovery pro-
cedures, thereby violating appellants’ rights under the due
process clause, the Administrative Procedure Act and the
Commission’s own rules of practice. Essentially the same
claim was made by one of the adjudicative appellants, At-
lantic Richfield, in a case recently before this court, FTC
v. Atlantic Richfield Company.” This court, concluding
that there was no clear Commission determination of
whether FTC rules of practice permitted access by Com-
mission prosecutors to investigatory materials outside the
discovery process, remanded the case with instructions to
the Commission to interr >t its own rules in the first in-
stance.’ The Commission on June 2, 1978, completed its
139 U.S.App.D.C. ——, 567 F.2d 96 (1977).
49 Td. at ——, 567 F.2d at 106.
In FTC vy. Atlantic Richfield Co. this court required sequestra-
tion of the investigative documents pending the Commission’s in-
terpretation of its rules as required on remand in order to ensure
that discovery in the FTC adjudicative proceeding proceed accord-
ing to the Commission’s interpretation of its rules. 567 F.2d at
106-107. Following the issuance of Atlantic Richfield on July 25,
1977, the adjudicative ccrporations moved the District Court to
amend its final order and judgment by fashioning a sequestration
order similar to the one issued in Atlantic Richfield. See 1977-2
Trade Cases 72,420 (D.D.C. July 29, 1977). In response the Com-
mission committed to prevent access, outside normal discovery
process, by complaint counsel to either the LB or CPR reports or
to any unpublished aggregate data based on such reports pending
the Commission’s interpretation of its rules. Letter from Caro] M.
Thomas, Secretary to the FTC, to Robert G. Jordon, IIT (July 29,
1977) (LB App. 2781). We agree with the District Court that the
FTC’s voluntary commitment to sequester the LB and CPR data
to the same extent required by this court’s order in Atlantic Rich-
field was adequate.
46
task and concluded that its rules for adjudicative proceed-
ings do not prevent access by complaint counsel to docu-
ments and information otherwise properly obtained by the
Commission without leave of the Administrative Law Judge
in charge of the adjudication and without notice to the ad-
judicative respondent.’
Adjudicative appellants contend that the LB and CPR
orders should not be enforced as to them because of the
potential for allegedly unlawful use of the LB and CPR
data in the adjudicative proceedings. We agree fully with
the District Court that these claims do not go to the ques-
tion of enforcement because ‘‘the potential jeopardy of
procedural rights in the adjudicative proceedings cannot
impinge upon the FTC’s right to collect the information
in question, only upon the use to which the information
might be put.’’*** The claims presented by the adjudicative
appellants relate not to their rights with respect to the
the Line of Business and Corporate Patterns Report sur-
veys but rather to claimed rights in the adjudicative pro-
ceedings currently pending at the FTC. These assertions
must be made first in those administrative proceedings and
then pursued, if necessary, in the administrative and judi-
cial avenues of appeal. As this court has stated clearly in
Atlantic Richfield:
Subsequent to the Commission’s interpretation of
its rules, all the legal questions which Atlantic wishes
to raise will be comprehended within the Exxon adju-
dicatory proceeding, and dealt with by the Adminis-
trative Law Judge....
If Atlantic is dissatisfied with the Commission’s
construction of its rules, Atlantic can raise these claims
In the Matter of Subpoena Duces Tecum Addressed to At-
lantic Richfield Co., et al., FTC Docket No. 741-0019.
#2 432 F.Supp. at 313. See note 121, supra.
47
in the context of an appeal from the final decision of
the agency in the adjudicative proceeding.**
The present litigation is no more appropriately suited to
resolution of any claims that the corporations may wish to
raise with respect to the Commission’s interpretation of its
rules than were the proceedings in Atlantic Richfield. Rais-
ing these issues at this juncture is improper, and, accord-
ingly, we affirm the District Court’s order.
C. The Comptroller General’s Review.
Appellants’ final allegation of error is that the Comp-
troller General’s approval of the Line of Business form
was defective because it was premised on a misunderstand-
ing of the criteria for review established by Section 3512
of the Federal Reports Act.’ This statute requires the
independent regulatory agencies to submit proposals for
the collection of information from ten or more persons to
the Comptroller, who must review the form and advise the
agency within 45 days whether it satisfies the requirements
of the Federal Reports Act.
43 Supra note 139, 567 F.2d at 107.
44The Corporate Patterns Report form was submitted to the
Comptroller General by the Federal Trade Commission on January
23, 1975. The Comptroller published a notice of the proposed sur-
vey in the Federal Register on January 31, 1975, 40 Fed. Reg.
4689, soliciting written comments from all interested parties. In a
letter dated March 24, 1975 from Monte Canfield, Jr., Director of
the General Accounting Office, to FTC Chairman Lewis A. Eng-
man the CPR form was cleared for use by the FTC (CPR App.
777). Although the GAO expressed concern about the ‘‘meaning-
fulness’’ and confidentiality of the CPR data sought, it did not
consider these reservations to be a basis for denying clearance
under the review provisions of the Federal Reports Act.
The corporate parties raise no objection to the Comptroller’s
clearance of the CPR form.
48
The Comptroller construes Section 3512 of the Federal
Reports Act as establishing two criteria for review of data-
collection plans. These two criteria are set forth in Section
3512(b), which states:
In carrying out the policy of this section, the Comp-
troller General shali review all existing information
gathering practices of independent regulatory agen-
cies as well as requests for additional information with
a view toward—
(1) avoiding duplication of effort by indepen-
dent regulatory agencies, and
(2) minimizing the compliance burden on busi-
ness enterprises and other persons.’
In approving the LB form, the Comptroller specifically
found that the information sought was not available to the
FTC from another federal source and that the Commission
“6 Td, § 3512(b). Great weight must be given to an agency’s
interpretation of its statutory mandate. See Chemehevi Tribe of
Indians v. FPC, 420 U.S. 395, 409-410, 95 S.Ct. 1066, 1075-1076,
43 L.Ed.2d 279, 289-290 (1975); Griggs v. Duke Power Co., 401
U.S. 424, 433-434, 91 S.Ct. 849, 854-855, 28 L.Ed.2d 158, 165-166
(1971) ; Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381, 89
S.Ct. 1794, 1802, 23 L.Ed.2d 371, 384 (1969); Udall v. Tallman,
380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616, 625 (1965).
Appellants suggest that the Comptroller’s clearance regulations
reflect a contemporaneous interpretation of § 3512 that includes a
third statutory review criterion, ‘‘appropriateness.’’ The regula-
tions simply refer to a determination that the forms are ‘‘appro-
priate for collection of the information sought,’’ 4 C.F.R. §§ 10.7,
10.12 (1976). We find no greater support for appellants’ expansive
construction of this language in the regulations than in the statute
itself. Moreover, the agency’s statement at the time these regula-
tions were proposed reflects a contemporaneous interpretation of
the statute by the Comptroller that comports with his present view,
and to which we give the appropriate deference. 39 Fed. Reg. 2436
(1974).
49
had sufficiently minimized the respondents’ burden of com-
pliance with the reporting requirement.’
Appellants argue that the Comptroller was obliged to
determine additionally that the data sought was ‘‘appro-
priate’ to the FTC’s expressed need. This third criterion
of review, appellants contend, is imposed implicitly by
Section 3512(d) of the Federal Reports Act, which states:
While the Comptroller General shall determine the
availability from other Federal sources of the infor-
mation sought and the appropriateness of the forms
for the collection of such information, the independent
regulatory agency shall make the final determination
as to the necessity of the information in carrying out
its statutory responsibilities and whether to collect
such information. (emphasis added)**
The determination of appropriateness in this context, ap-
pellants suggest, should entail a substantive evaluation of
the requested data to establish that it meets ‘‘some mini-
47 Letter from Monte Canfield, Jr., Director of the General Ac-
counting Office, to FTC Chairman Engman (Aug. 18, 1975) (LB
App. 798-802).
On July 1, 1975 the FTC submitted the 1974 LB form to the
Comptroller (LB App. 2025). The GAO published the proposed
form in the Federal Register on July 8, 1975, 40 Fed. Reg. 28677,
soliciting comments from interested persons. The 1974 LB form
was cleared for use by the FTC in a letter dated August 18, 1975
from Monte Canfield, Jr., Director of the GAO, to FTC Chairman
Engman (LB App. 798-802). See Affidavit of Carl F. Bogar, Asst.
Director, Procurement Systems & Acquisition Div. GAO (LB
App. 2019).
The Comptroller’s August 18 letter indicated that revisions in
the LB form for 1973 had improved, in the Comptroller’s view, the
meaningfulness of the data to be collected. The Comptroller ex-
pressly indicated, however, that his views were advisory and not
within the standards of review provided by § 3512 (LB App.
801-802). :
48 44 U.S.C. § 3512(d) (Supp. V 1975).
50
mum standard of meaningfulness and reliability in terms
of the agency’s stated need.’’ *** We need appellants’ argu-
ment at odds with both the language and the legislative
history of Section 3512 of the Federal Reports Act.
Section 3512 was added to the Federal Reports Act in
1973 to create a special review procedure for the data-
collection plans of the federal regulatory agencies.” Prior —
to the 1973 amendment, the regulatory agencies were sub-
ject to the clearance authority of the Office of Management
and Budget (OMB), which continues to serve this function
vis-a-vis nonregulatory agencies.’** Congress’ express pur-
pose in establishing a different review process for the regu-
latory agencies was
to insure that the existing clearance procedure for
questionnaires or requests for data does not become,
inadvertently or otherwise, a device for delaying or
obstructing the investigations and data collection neces-
sary to carry out the important regulatory functions
assigned to the independent agencies by the Con-
gress.**?
Prior to the 1973 amendment, the OMB possessed auv-
thority to undertake a substantive appraisal of the data that
a regulatory agency sought and to bar collection upon a
finding that the data were not necessary for effectuation of
the agency’s function or particular program’s purpose.’
*° Joint Appellants LB Brief at 72.
© Pub, L. No. 93-153, Title IV, § 409(b), 89 Stat. 593 (1973
codified at 44 U.S.C. § 3512 (Supp. V 1975). —
**} Id. The OMB’s clearance authority is defined 44 U.S.C.
§§ 3501-3511 (Supp. V 1975). ad
**? H.R. Rep. No. 93-624, 93d Cong., 1st Sess. 31 (1973).
8 44 U.S.C. § 3586 (Supp. V 1975) provides:
Upon the request of a party having a substantial interest,
or upon his own motion, the Director of the Bureau of the
dl
Congress regarded the evaluation of the regulatory
agency’s need for data as essentially a policy determina-
tion and considered the reviewing agency’s veto power as
a source of interference with the independence of the regu-
latory agencies.’ So in creating a separate clearance pro-
cedure for these agencies, Congress specifically provided
in Section 3512(d) that ‘‘the independent regulatory
agency shall make the final determination as to the neces-
sity of the information in carrying out its statutory re-
sponsibilities and whether to collect such information.” **
Appellants’ construction of ‘‘appropriateness’’ as a re-
quirement that the Comptroller evaluate the data sought
in terms of the agency’s need is untenable in light of this
provision reserving for the agency the determination as to
the necessity of the information in carrying out its statu-
Budget may determine whether or not the collection of infor-
mation by a Federal agency is necessary for the proper
performance of the functions of the agency or for any other
proper purpose. Before making a determination, he may give
the agency and other interested persons an opportunity to be
heard or to submit statements in writing. To the extent, if
any, that the Director determines the collection of information
by the agency is unnecessary, for any reason, the agency may
not engage in the collection of the information.
154 Senator Bentsen, author of the enacted amendment, made the
following statement on the Senate floor at the time of the amend-
ment’s passage :
Unlike the previous oversight by OMB the GAO (Comptroller)
would not make the final decision as to whether the informa-
tion was needed. That decision would be left with the inde-
pendent agency. My feeling was that if the General Account-
ing Office were given veto power over whether information was
needed, it is putting them in the policy-decision framework,
and I do not think that should be done.
119 Cong. Rec. 24085 (1973). See also id. at 23884-23885.
188 44 U.S.C. § 3512(d) (Supp. V 1975).
52
tory “2:sponsibilities.** We therefore agree with the District
Court **’ and the Comptroller General that the term ‘‘ap-
propriateness’’ serves as merely a shorthand reference to
the requirement of Section 3512(b) *** that the Comptroller
inspect the regulatory agency’s information-gathering pro-
posal with a view toward minimizing compliance burden.’”
196 Statutes must be construed when possible to avoid disharmony
among their provisions.
187 439 F.Supp. 307-310 (LB App. 227-30).
68 44 U.S.C. § 3512(b) (Supp. V 1975) quoted in full, text supra
at 50-51.
16° Appellants suggest an alternative theory of statutory con-
struction in support of their claim that the Comptroller is required
to analyze the meaningfulness or reliability of the requested data
to the agency’s stated need. They suggest that the burden inquiry
of § 3512(b) should entail a ‘‘cost-benefit’’ analysis balancing the
cost to the reporting companies with the benefit to the agency.
Since the result of appellants’ assertion is inconsistent with the
delegation to the agency of the determination of its necessity for
the data, we reject the ‘‘cost-benefit’’ theory on the same grounds
on which we relied to repect the ‘‘appropriateness’’ theory.
The Commission and the Comptroller raise several additional
issues. Both contend that the Comptroller’s actions under the
Federal Reports Act are not subject to judicial review. Their argu-
ment is that by limiting the period of time in which the Comp-
troller can review regulatory information-gathering forms to 45
days, 44 U.S.C. §3512(d) (Supp. V 1975), Congress intended to
preclude judicial review. See Morris v. Gressette, 482 U.S. 491, 97
8.Ct. 2411, 53 L.Ed.2d 506 (1977) ; Harris v. Bell, —— U.S. App.
D.C. ——, 562 F.2d 772 (1977). The Commission also suggests that
the Comptroller’s clearance function is agency action committed
to agency discretion and therefore exempt from judicial review
under the Administrative Procedure Act, 5 U.S.C. § 701(a) (2)
(1976). The District Court rejected this argument, 432 F.Supp.
at 207-308. But see General Electric Co. v. FTC, 411 F.Supp. 1004,
1005 (N.D.N.Y. 1976) ; Westinghouse Electric Corp. v. FTC, 1976-
1 Trade Cas. 68,815 (S.D. Ohio 1976). The Commission also sug-
gests that the express purpose of the Federal Reports Act to pro-
tect ‘‘especially small business enterprises,’’ 44 U.S.C. § 3512(a)
(Supp. V 1975), excludes the large corporate appellants from the
53
III. Conciusion
The judgment of the District Court is affirmed. The cor-
porate parties shall comply with the Line of Business and
Corporate Patterns Report orders as issued by the Federal
Trade Commission within 30 days of the date of this
opinion.
So ordered.
Act’s zone of interest, thereby depriving them of standing to chal-
lenge the Comptroller’s clearance of the LB form. See Barlow v.
Collins, 397 U.S. 159, 90 S. Ct. 832, 25 L.Ed 2d 192 (1970).
Finally, the Commission contends that the challenge to the Comp-
troller’s clearance is not properly raised as a defense in an en-
forcement proceeding, FTC v. Texaco, Inc., supra note 90, 180
U.S.App.D.C, at 407, 555 F.2d at 879. Since we conclude that the
arguments made by the corporations with respect to the Comp-
troller’s exercise of his review and clearance authority under the
Federal Reports Act are clearly lacking in merit, we need not
consider the various theories propounded by the FTC and the
Comptroller.
54
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Master Fire Misc. No. 76-0126
In Re FTC Corporate Patterns Report Litigation,
Tuts Document Reuates To:
Aut Actions—MastTErR Fie ONLY
Master Fire Misc. No. 76-0127
In Re FTC Liye or Business Report Litication
Txuis Document Reuates To:
Aut Actions—MastTer Fitz OnLy
(Filed January 31, 1977)
Memorandum Opinion and Order
This matter arises before the court in a number of con-
solidated enforcement and preenforcement cases. These ac-
tions concern the Federal Trade Commission’s information-
gathering activities in connection with the Line of Business
Program (LB) and the Corporate Patterns Report Survey
(CPR). The consolidated cases include the FTC’s enforce-
ment action against various corporations that have failed
to comply with Commission orders requiring them to file
the 1974 Form LB,’ the FTC’s enforcement action against
various corporations that have failed to comply with Com-
mission orders requiring them to file CPR forms,’ pre-
enforcement actions concerning the LB Program filed
against the FTC, certain FTC Commissioners, and the
Comptroller General by a number of companies in the Dis-
trict of Delaware later transferred to this court, preenforce-
ment actions concerning the CPR Survey filed against the
FTC, certain FTC Commissioners, and the Comptroller
General by a number of companies in the District of Dela-
ware later transferred to this court, and similar actions
concerning the LB Program and the CPR Survey originally
filed in the Southern District of New York and later trans-
ferred to this court.
1FTC v. A. E. Staley Mfg. Co., Mise. No. 76-0080.
*FTC v. Air Products & Chemicals, Inc., Mise. No. 76-64.
’ a)
Pursuant to this court’s order of July 30, 1976, the
parties have completed the filing of and opposition to all
motions that should be decided by the court at this time.
In addition, the parties have submitted outlines detailing
the discovery or evidentiary hearings they believe neces-
sary before the court can rule on the merits of a claim or
defense. In light of the volume of the pleadings in this
case,® the court could not hope to grapple with all the
pending motions at one time. Accordingly, the court held
an oral hearing on four pending motions on January 7,
1977: the corporate parties’ motion to dismiss the LB and
CPR enforcement actions, the FTC’s motion to dismiss the
LB and CPR preenforcement actions, the Comptroller Gen-
eral’s motion to dismiss the LB and CPR preenforcement
actions, and the FTC’s motion for a more definite state-
ment of counterclaims. Each motion is discussed in turn,
and an appropriate order follows this memorandum
opinion.
I. Corporate Parties’ Motion to Dismiss
The corporate parties move to dismiss the enforcement
actions concerning the LB and CPR orders for lack of juris-
diction. The corporate parties proffer three basic argu-
ments in support of their motion: (1) the FTC can obtain
mandatory relief only through a civil action pursuant to
the Federal Rules of Civil Procedure, and the court thus
has no matter pending; (2) the FTC must bring any en-
forcement claims against preenforcement plaintiffs as com-
pulsory counterclaims; and (3) the court does not have
personal jurisdiction over several respondents in the en-
forcement proceeding. For the reasons set forth below, the
court must deny or defer the corporate parties’ motion
to dismiss.
*The court wishes to note that the parties have simplified the
court’s task enormously by submitting consolidated pleadings
wherever possible.
56
A. Cwil Action v. Summary Procedure
The corporate parties contend that the FTC can obtain
relief in the enforcement proceedings only through insti-
tution of a normal civil action pursuant to the Federal
Rules of Civil Procedure. The FTC has not followed the
usual complaint-summons-service procedure for institution
of a civil suit; instead the Commission has employed a peti-
tion-show cause order approach, purportedly under the
authority of section 9 of the Federal Trade Commission
Act.‘ Its goal is a mandamus remedy under that section.
The corporate parties’ argument on the ability of the FTC
to obtain a mandamus remedy in a special reports order
case under section 9 is a simple one. They contend that
Rule 81(b) of the Federal Rules of Civil Procedure,‘
abolishing the writ of mandamus, must control over any in-
consistent practice under section 9 predating the adoption
of the Rules. Indeed, section 1 of the Rules Enabling Act,
28 U.S.C. § 2072, provides that all ‘‘laws in conflict with
such rules shall be of no further force or effect ....”
This argument correctly states the law, but does not go
far enough. Rule 81(b) merely abolished the writ of manda-
mus and not the remedy; mandamus relief now is available
‘‘by appropriate action or by appropriate motion.’’ The
effect of Rule 81(b) therefore is not earthshaking since it
* Section 9, 15 U.S.C. § 49, provides in relevant part :
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 man-
damus commanding any person, partnership or corporation
to comply with the provisions of sections 41 to 46 and 47 to
58 of this title or any order of the Commission made in pur-
suance thereof.
* Rule 81(b) provides:
The writs of scire facias and mandamus are abolished. Relief
heretofore available by mandamus or scire facias may be ob-
tained by appropriate action or by appropriate motion under
the practice prescribed in these rules.
57
merely substitutes in place of the writ practice an action
or motion under the Rules. 7 J. Moore, Federal Practice
Par. 81.07, at 81-96 (2d ed. 1975). The corporate parties
attempt to complete the circle of their argument by noting
that a motion or action for mandamus must occur, in light
of Rule 81(b), within the context of the Rules. They argue
that the FTC has neither commenced an action nor made
a motion under the Rules. To commence an action requires
a complaint and summons, and to make a motion requires
a pending case, in the corporate parties’ view. This argu-
ment holds some logic and appeal, but the issue does not
reach this court as a question of the first impression.
The corporate parties concede that the FTC may obtain
summary enforcement of its subpoena orders. They con-
tend, however, that Rule 81 contemplates separate treat-
ment for subpoena order enforcement. Indeed, Rule 81(a)
(3) leaves some discretion in the court in subpoena cases.°
The corporate parties admit that a court has the ‘‘discre-
tion to be flexible’’ in the application of the Rules to sub-
poena enforcement cases. They note that the Rules contain
no similar allowance rendering the application of the Rules
discretionary when mandamus relief is sought, however;
the express authorization of Rule 81(a)(3) renders sub-
poena cases inapposite to the mandamus cases facing the
court here. Again, the corporate parties have presented a
logical argument,’ but there exist a number of cases pur-
® The final sentence of Rule 81(a) (3) provides:
These rules apply to proceedings to compel the giving of testi-
mony or production of documents in accordance with a sub-
poena issued by an officer or agency of the United States under
any statute of the United States except as otherwise provided
by statute or by the rules of the district court or by order of
the court in the proceedings. (emphasis supplied)
*The FTC places great reliance on the parallel treatment ac-
corded subpoena enforcement and mandamus enforcement under
section 9 of the FTC Act. Indeed, this parallel treatment by Con-
gress of subpoenas and orders has continued in the Magnuson-Moss
58
porting to apply a summary procedure in mandamus cases
as well as subpoena cases.
Courts began to grapple with the question of summary
mandamus procedures in enforcement of FTC orders in
the case of United States v. Associated Merchandising
Corp., 256 F. Supp. 318 (S.D. N.Y. 1966). The court in
Associated Merchandising considered the FTC’s attempt
to enforce an order ‘‘directing respondents to produce
certain documents by way of pretrial discovery”’ in a
pending FTC proceeding. In response to the companies’
contention that the FTC could enforce the orders only by
commencing a plenary civil action, the court stated:
As a general rule, district courts do not issue directions
in the nature of mandamus except in aid of jurisdiction
already acquired. .. .’ However, where the Court was
able to discover a congressional authorization for mse
of a writ of mandamus, it approved the issuance oan
a petition of a peremptory writ. [citation omitted] By
Section 49, [section 9], Congress has expressly con-
ferred jurisdiction to issue a writ of mandamus. There-
fore, it seems clear that Congress has expressly au-
thorized the court to proceed summarily to enforce
orders of the Federal Trade Commission for the pro-
duction of documents.
256 F. Supp. at 321. The corporate parties attempt to dis-
count this case (and indeed cite it as the genesis of later
courts’ confusion) on the ground that, although the court
spoke of mandamus, it was really simply a subpoena en-
forcement action. As such, in the corporate parties’ view, it
Warranty-—Federal Trade Commission Improvement Act, Pub. L.
No, 93-637, 88 Stat. 2183. Section 204 of the Act amends section
16 of the FTC Act to authorize the Commission to conduct pro-
ceedings to enforce subpoenas and section 6 orders. See 15 U.S.C.
§ 56(a)(2)(D). While this shows evidence of Congressional intent
to treat the two remedies similarly, it does not answer the cor-
porate parties’ Rule 81(b)-Rule 81(a)(3) dichotomy argument.
59
was subject to the undisputed Rule 81(a)(3) exception, al-
though the court mistakenly cited Rule 81(b). The FTC
draws a distinction between a subpoena and an order to
produce documents,* but fails to explain any essential dis-
tinction or significance to any such difference.
Later cases held some light on the issue allegedly con-
fused in Associated Merchandising. In Federal Trade Com-
mission v. Sherry,’ Judge Robinson of this court, citing
Associated Merchandising with approval, held that admini-
strative subpoenas are enforceable by way of summary
proceeding under the discretionary authority of Rule 81(a)
(3). The corporate parties distinguish this case as another
subpoena enforcement case. In Federal Trade Commission
v. Jorgenson,” Judge Gasch of this court rejected an argu-
ment, in the context of an FTC subpoena and order requir-
ing access to particular files, that the FTC could not en-
force its subpoena by way of a summary proceeding. The
court cited nine cases to support its conclusion that ‘‘[a]
summary proceeding suffices.’’ Slip opinion, at 2 n. 2. While
the corporate parties distinguish this case and all but one
of the cases cited therein as subpoena enforcement cases,
the court in Jorgensen twice referred to the action as in-
volving a subpoena and order. Slip opinion, at 1, 1 n. 1.
Finally, in Emerson Electric Co. v. Federal Trade Commis-
sion," Judge Pratt of this court considered a claim similar
to that made by the corporate parties in this case and re-
jected it as being ‘‘devoid of merit.’’
In one notable case cited by the parties, this issue was
present but, so far as the court can determine, was not
*The FTC likens its procedures to those involved in a Rule 45
subpoena and a Rule 34 order to produce documents.
* 1969 Trade Cas. Par. 72,906 (D.D.C. 1969).
1° Misc. No, 75-46 (D.D.C. May 16, 1975).
™ Mise, No, 76-0002 (D.D.C. July 21, 1976).
60
briefed, argued, or considered. In United States v. Litton
Industries, Inc.,* the Ninth Cireuit considered FTC orders
to file special reports and subpoenas duces tecum concern-
ing the effects of corporate mergers. The court suggested
that an enforcement proceeding pursuant to section 9 of the
FTC Act was proper, without comment on the form that
proceeding should take.”
The corporate parties’ job in attempting to blunt the
weight of judicial authority on this question is an unen-
viable one. They have asked the court to ignore a unani-
mous string of cases allowing a summary procedure on
the grounds that these cases concerned inapposite subpoena
enforcement, did not adequately consider the issue, or were
just plain wrong. This court does not read these cases as
unconvineedly as do the corporate parties. There is no
debate that this issue was at least brought to the court’s
attention in Jorgenson, and that the court treated it as a
disputed issue. Similarly, the court enforced the FTC’s
orders in Associated Merchandising under the mandamus
provisions of section 9 irrespective of whether it was in fact
a subpoena that the FTC sought to enforce. That court
explicitly considered the relationship between a mandamus
under section 9 and Rule 81(b). That conclusion was cited
with approval by the court in Sherry. See 1969 Trade Cas.
at 87,455. The same challenge was made by the corporate
parties here was considered and rejected by the court in
Emerson Electric. In all, the court finds a respectable
amount of authority for the proposition that the FTC can
proceed in mandamus enforcement actions by way of sum-
mary proceeding.
_--——
12 462 F.2d 14 (9th Cir. 1972).
13 The FTC suggests that the court infer approval of the practice
from the court’s silence on the summary proceeding issue, because
the question goes to subject matter jurisdiction, into which a court
should inquire sua sponte if necessary. However, it is more prob-
able that any courts permitting the practice without comment
simply were unaware of the sophisticated argument presented here
by the corporate parties.
61
Moreover, the logic of the corporate parties’ Rule 81(b)
argument is hardly airtight. The rule merely substituted a
motion or action practice for the existing writ practice. The
corporate parties candidly admit that before 1946, the date
the subpoena exception sentence was added to Rule 81(a)
(3), the Rules were considered to have only limited appli-
cation to enforcement proceedings, which were not plenary
in nature. 7 J. Moore, Federal Practice Par. 81.06[1], at
81-84 (2d ed. 1975). There exists as much a logical basis
to assume that Congress, in amending the rule concerning
subpoena enforcement, desired to leave existing practice in
other enforcement actions unchanged as there is to assume
that Congress by its silence meant to subject all enforce-
ment proceedings to the full panoply of Rwes require-
ments. Authority exists for the proposition that an action
seeking relief in the nature of mandamus may be com-
menced by motion or petition when there is no pending
action. 7 J. Moore, supra Par. 81.07, at 81-96 (citing Asso-
ciated Merchandising and Sherry). The court on the whole
finds the corporate parties’ argument ingenious, well-
briefed, and well-argued, but nevertheless lacking in merit.
While not impacting on the court’s decision on the legal
issue, the court also is mindful that, as a practical matter,
the debate on this question is a tempest brewed in a rather
small teapot. Even if the court accepted the corporate
parties contention that the FTC had to commence a normal
plenary civil action under the Rules, that conclusion simply
would force the FTC to file a complaint and begin again.
The ensuing delay makes little sense to the court: the FTC
has filed a petition instead of a complaint and has pro-
ceeded by show cause order rather than summons. The cor-
porate parties point to no prejudice flowing from this pro-
cedure and, indeed, appear to recognize that the two have
operated in this case as functional if not legal equivalents.
In fact, the corporate parties offered to accept the petitions
as complaints if the court makes ‘‘clear that the filing of a
complaint was essential to the Commission’s request for re-
62
lief.’’ Respondents’ Reply Memorandum, at 5-6. The court
declines, for the reasons stated above, tn accept the condi-
tion to the corporate parties’ concession.** But the fact that
the corporate parties have offered to proceed despite this
alleged defect in the commencement of the actions further
demonstrates that they have been denied no procedural
rights because of the FTC’s course of action.
B. Compulsory Counterclaims
The corporate parties’ second argument in support of
its motion to dismiss is that the FTC must bring any en-
forcement actions against preenforcement plaintiffs as com-
pulsory counterclaims. Having failed to assert the enforce-
ment actions as counterclaims to the pending preenforce-
ment actions, the court should dismiss them under the au-
thority of Rule 13(a). Rule 13(a) provides, in part:
A pleading shall state as a counterclaim any claim
which at the time of serving the pleading the pleader
has against any opposing party, if it arises out of the
transaction or occurrence that is the subject matter of
the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom
the court cannot acquire jurisdiction.
The corporate parties contend that the compulsory counter-
claim provisions of Rule 13(a) clearly apply to the instant
actions; ** since the subject matter of the enforcement ac-
tion without doubt arises out of the same ‘‘transaction or
1*The corporate parties also ask the court to ‘‘direct the Com-
mission to file proper pleadings in such matters in the future.’’
Reply, at 6. This, the court would not do in any case, since future
cases obviously are not now before the court and the court should
not render advisory opinions.
1® Rule 13(a) applies generally to the United States and its
agencies. TOP, Inc. v. Federal Deposit Ins. Corp., 487 F.2d 131
(3d Cir. 1973); 3 J. Moore, Federal Practice Par. 13.25 (2d ed.
- 1975).
63
occurrence’’ that forms the basis for the preenforcement
actions,’* Rule 13(a) required assertion of these claims as
counterclaims to the preenforcement actions. In addition to
the clear requirements of the rule, the corporate parties
argue that sound policy considerations support application
of the compulsory counterclaim rule in this instance.”
The FTC opposes this argument on the ground that, even
if Rule 13(a) applies, the time has not yet come for the
FTC to file its counterclaims. The FTC has moved to dis-
miss the preenforcement actions, and this court has not yet
ruled on this motion. Under paragraph 10 of this court’s
July 30, 1976 order, answers are not due until 30 days
after notice of the court’s denial of the motions to dismiss.
Thus the FTC is not yet required to file its answers, much
less its counterclaims. The corporate parties seek to avoid
this contention on two grounds. First, they argue that the
Commission cannot raise this challenge again because the
motion to dismiss already has been adversely determined to
the FTC by the Delaware district court and the Third
Circuit, and that decision has become the law of the case
for this court. This argument plainly is without merit; not
only may circumstances have changed since those opinions
were written, but also they concerned the 1973 LB orders
and not the 1974 orders here at issue. Second, the corporate
parties contend that the duty to assert a compulsory coun-
terclaim is only postponed by a motion to dismiss, and con-
tinues unless the motion is granted. A claim becomes non-
**A number of tests have been used to determine the same
“‘transaction or occurrence’’ test. See Pipeliners Local 798 v.
Ellerd, 503 F.2d 1193, 1198 (10th Cir. 1974); 6 C. Wright & A.
Miller, Federal Practice and Procedure § 1410, at 42 (1971).
**The corporate parties quote a passage from Columbia Plaza
Corp. v. Security Nat’l Bank, 525 F.2d 620, 626 (D.C. Cir. 1975),
relating to the conservation of judicial resources under Rule 13(a)
by eliminating duplicate proceedings. Since the enforcement and
preenforcement cases have been consolidated in this court, however,
judicial economy problems have been minimized.
64
compulsory only if it was the subject of another pending
action at the time the action was commenced. Rule 13(a).
This argument does no more than suggest that the counter-
claims may be due at some time in the future; in the in-
terim, the corporate parties expect the FTC to postpone
its separate enforcement actions if it desires to move to
dismiss the preenforcements actions. The court does not
accept this contention.
The court identifies additional reasons to view the cor-
porate parties’ claims with some hesitancy. They can cite
no cases in which a court has treated an enforcement ac-
tion as a compulsory counterclaim, while the FTC cites
two in which the argument was rejected. A.O. Smith Corp.
v. Federal Trade Commission, 417 F. Supp. 1068, 1088-89
(D. Del. 1976); Federal Trade Commission v. Emerson
Elec. Co., Mise. No. 76-0002 (D.D.C. July 21, 1976). The
FTC’s enforcement actions involve assertion of rights
under a Congressionally mandated enforcement scheme,
thus distinguishing the case from the Columbia Plaza case
relied on by the corporate parties. See A.O. Smith Corp.,
supra. Acceptance of the corporate parties’ argument would
mean that companies seeking to resist FTC orders might
well be able to choose the forum and pace of the litigation
simply by bringing preenforcement actions. These pre-
enforcement actions could, as here, be brought in more
than one forum. The implications of the corporate parties’
contentions might work more to encourage than discourage
duplicative litigation, and thus ultimately result in im-
peding the policy objectives of Rule 13(a).** The conse-
** The corporate parties suggest that duplicative litigation could
be avoided by normal procedures: motions for change of venue and
coordination under the guidelines of the Judicial Panel on Multi-
District Litigation. This argument does not meet, however, the
FTC’s concern at being forced to raise or lose its enforcement
claims at the times and places dictated by companies’ preenforce-
ment actions. At best, this relief would come at a later time, after
the FTC would have been forced to submit to the companies’
timing for asserting enforcement claims.
dabd.intinai slide
a
65
quences of a ruling in the corporate parties’ favor could
be undesirable and unwarranted.
C. Personal Jurisdiction
A total of eight of the corporate parties assert a lack of
personal jurisdiction over them. This claim encompasses
two primary contentions: (1) that no summons and com-
plaint were issued, an indispensable prerequisite to a
court’s assertion of jurisdiction over a party in a civil
action; and (2) these corporate parties were served beyond
the confines of the District of Columbia despite lack of sta-
tutory sanction for such service. The first argument can be
handled quite easily, as it amounts to a continuation of the
claim that the FTC cannot bring its enforcement actions by
petition and show cause order. The court has rejected this
argument. See §1(A), supra. The corporate parties cer-
tainly have received the notice a summons is designed to
provide under the petition-show cause order procedure.
A more difficult issue is posed by the corporate parties’
second argument. The FTC effected service in these en-
forcement actions by two methods: personal service by a
United States Marshal outside of the District of Columbia
and service on the D.C. Recorder of Deeds to be mailed to
the named respondents. Rule 4(f) of the Federal Rules of
Civil Procedure provides that service of process may occur
beyond the territorial limits of a state ‘‘when authorized
by a statute of the United States or by these rules... .”’
Rule 4(e) authorizes extraterritorial service where ‘‘a stat-
ute or rule of court of the state in which the district court
it held’’ so provides. The FTC does not argue that a fed-
eral statute permits extraterritorial service in the circum-
stances of this case; the court therefore will focus on state
statutes purporting to allow such service here.
The parties agree that the potentially applicable statutes
are 13 D.C. Code § 334 and 29 D.C. Code § 933i. The parties
further agree that the relevant portions of these two stat-
66
utes require that a corporation be ‘‘doing business”’ in the
District of Columbia before it is amenable to service.’* The
parties, unsurprisingly, have differing interpretations of
what constitutes doing business, however.
The corporate parties argue that the FTC must show
that each moving company has ‘‘fairly extensive’’ contacts
with D.C. in order to sustain jurisdiction for a cause of
action not arising out of the company’s activity in D.C. A
somewhat higher standard should exist for such an un-
connected cause of action than for one arising directly from
the company’s contacts with the forum district.” The cor-
porate parties go on to contend that the companies must
maintain a permanent office in D.C. in order to be subject
to service. Corporate Parties’ Memorandum, at 50 n. 76.
The court finds this argument to be without merit; foreign
corporations often have been found to be doing business
in D.C. despite the lack of a permanent office. E.g., Wash-
ington v. Hospital Service Plan, 345 F.2d 105 (D.C. Cir.
1965) ; Frene v. Louisville Cement Co., 134 F.2d 511 (D.C.
Cir. 1943); Stevens v. American Service Mutual Ins. Co.,
234 A.2d 305 (D.C. Ct. App. 1967) ; Key v. 9.C. Johnson &
Son, Inc., 189 A.2d 361 (D.C. Ct. App. 1963). The corporate
parties also contend that many of the contacts the moving
parties might have with the District are maintained for the
purpose of interacting with the federal government. They
claim the ‘‘government contacts’’ principle protects them
See Payton v, Summit Loans, Inc., 253 A.2d 459, 460 n, 1
(D.C. Ct. App. 1969).
*° While the parties cite no cases explicitly drawing the distine-
tion, it appears implicit in several of the leading cases, See Wash-
ington v. Hospital Service Plan, 345 F.2d 105 (D.C. Cir. 1965);
Byrd v. Norfolk & Western Ry., 194 A.2d 651 (D.C. Ct. App.
1963) ; Key v. S. C. Johnson & Son, Inc., 189 A.24 361 (D.C, Ct.
App. 1963). See generally von Mehren & Trautman, Jurisdiction
rd ca A Suggested Analysis, 79 Harv. L, Rev. 1121, 1179
67
from the court’s consideration of these activities in deter-
mining amenability to service.”
The FTC contends that the court should address the
business purpose being served by the moving parties’ pres-
ence in D.C. It suggests that the marketing or products
in the District, through either solicitation of sales or ship-
ment or products, can constitute doing business. See Frene
v. Louisville Cement Co., 134 F.2d 511 (D.C. Cir. 1943);
Key v. S.C. Johnson & Son, Inc., 189 A.2d 361 (D.C. Ct.
App. 1963). Advertising within the District can be con-
sidered as a factor. Payton v. Summit Loans, Inc., 253
A.2d 459 (D.C. Ct. App. 1969). The FTC distinguishes
two cases relied on by the moving corporate parties ” as
hinging on the plaintiffs’ complete lack of contacts with
the forum state in those cases.” Here, it notes that the FTC
has obvious contacts with the District.”
The court is faced with a somewhat difficult task in at-
tempting to sort out the various claims of the parties. It
appears that solicitution of sales or shipment of goods
potentially can qualitfy as doing business. The necessary
showing should be at least somewhat higher for an uncon-
21 The government contacts exception had its genesis in Mueller
Brass Co. v. Alexander Milburn Co., 152 F.2d 142 (D.C. Cir.
1945), and its latest expression in Environmental Research Inter-
national, Inc. v. Lockwood Greene Engineers, Inc., 355 A.2d 808,
813-14 (D.C, Ct. App. 1976).
22 Ratliff v. Cooper Labs., Inc., 444 F.2d 715 (4th Cir.), cert.
denied, 404 U.S. 948 (1971); Seymour v. Parke Davis Co., 423
F.2d 584 (1st Cir. 1970).
8 See 423 F.2d at 587; Lee v. Walworth Value Co., 482 F.2d
297 (4th Cir. 1973) (distinguishing Ratliff on ground of plaintiffs’
lack of contact with forum district).
*4* But see Environmental Research Int’l, Inc. v. Lockwood Greene
Engineers, Inc., 355 A.2d 808, 812 (D.C. Ct. App. 1976) (plaintiff’s
activities in forum district cannot establish requisite contacts for
personal jurisdiction,
68
nected cause of action than for a cause of action arising
directly out of a defendant’s activities in the forum district.
The government contacts exception potentially applies,
depending on the purposes and functions served by those
contacts. Within this framework the court can examine the
situations of the moving companies to resolve what is es-
sentially a factual question about sufficiency of the contacts
of each company.
The moving corporate parties have submitted affidavits
concerning the extent of their contacts with the District of
Columbia. On the basis of these, they ask the court to con-
clude that no basis for personal jurisdiction over them
exists. The court finds these affidavits insufficient. Some
neglect to identify the dollar value of goods shipped to the
District, some fail to state whether D.C. shipments are a
substantial contribution to total sales, some are vague on
the question of distributors, detail men, or salesmen and
where they are located, and some fail to state conclusively
whether any goods are sold in the District at all. From
the information now before the court by way of these
affidavits, the court preliminarily believes that at least some
of these companies have sufficient contacts with the District
to qualify as transacting business under 29 D.C. Code
§ 933i(c). The court nevertheless feels that additional dis-
covery would be quite helpful to the court in making these
determinations, and it is advised that the FTC has pro-
pounded certain interrogatories that could help to resolve
this question.” The court therefore will permit this addi-
tional discovery and defer decision on this aspect of the
corporate parties’ motion to dismiss.
With respect to one moving party, Fairmont Foods, there
is no need to defer decision. Fairmont admits that it is
** The corporate parties have moved for a protective order as to
these interrogatories on the general grounds advanced in their ar-
guments on this question. The court will deny that motion for the
same reasons it cannot grant their motion to dismiss at this time.
69
authorized to do business in the District, has appointed
a registered agent, and received service of process through
that registered agent. This service is sufficient to bring
Fairmont before the court. 29 D.C. Code § 933i(a). Fair-
mont contends, however, that section 933i(a) relates solely
to manner of service, not amenability to service. In support
of the proposition, Fairmont relies on one D.C. case *
which held that the absence of a license to do business does
not mean that a company is not in fact doing business, and
on one Fourth Circuit case* not purporting to apply any
laws of the District. The court does not find these com-
pelling precedents for Fairmont’s position. The language
of section 933i(a) tracks closely that of section 933i(¢), but
no claim has been made that section 933i(c) does not relate
to amenability to service. Accordingly, Fairmont’s motion
to dismiss on this ground will be denied.
II. FTC’s Motion To Dismiss
The FTC parties move to dismiss the preenforcement ac-
tions concerning the LB and CPR programs. The court has
identified four basic arguments advanced by the FTC in
favor of this motion: (1) judicial review of the FTC’s
exercise of its powers of compulsory process is unavailable
by way of preenforcement action where no notice of default
has been issued; (2) even if judicial review potentially is
available, the corporate parties have failed to meet the
standards of the Abbott Labs trilogy; (3) the FTC itself
must be dismissed because it has not waived sovereign im-
munity in this instance; and (4) sound reasons exist for
the court to dismiss the preenforcement actions as a matter
of discretion. For the reasons stated below, the court re-
jects the first three arguments and wishes to defer a deci-
sion on discretionary dismissal.
2° Kelberine v. Societe Internationale, Etc., 363 F.2d 989, 993
(D.C, Cir. 1966), cert. denied, 385 U.S, 989 (1966).
7 Ratliff v. Cooper Labs, Inc., 444 F.2d 745, 748 (4th Cir.),
cert. denied, 404 U.S. 948 (1971).
70
A. Availability of Preenforcement Review
The FTC contends that judicial review of the validity
of the Commission’s exercise of its powers of compulsory
process can be had only in an enforcement proceeding
brought under section 9 or 10 of the FTC Act where no
notice of default has been issued. See St. Regis Paper Co.
v. United States, 368 U.S. 208, 226 (1961); Federal Trade
Commission v. Claire Furnace Co., 274 U.S. 160, 174 (1927).
The court will not deal extensively with this argument, as
it was persuasively rejected by the Third Circuit in A.0.
Smith v. Federal Trade Commission.” This court fully
concurs with the reasoning of that decision on this issue.
St. Regis and Claire Furnace must be considered in the
context of the more recent Supreme Court decisions in the
Abbott Labs trilogy.” As the Third Circuit noted:
The fundamental jural lesson flowing from Abbott
Laboratories is this: a person aggrieved by final agency
action may come to federal court for judicial review
‘so long as [a] no statute precludes such relief or
[b] the action is not one committed by law to agency
discretion.’ * * * We have examined the FTC Act and
find no clear and convincing evidence of a congressional
intent to bar judicial review of final FTC orders under
Section 6(b).
530 F.2d at 521. For these reasons the court concludes that
preenforcement review potentially is available to the cor-
porate parties in this situation.
28 530 F.2d 515, 519-21 (3d Cir. 1976).
? Abbott Labs v. Gardner, 387 U.S. 136 (1967); Toilet Goods
Ass’n v. Gardner, 387 U.S. 158 (1967); Gardner v. Toilet Goods
Ass’n, 387 U.S. 167 (1967).
*°Tt is not entirely clear to the court whether the FTC makes
this as a separate legal argument or as an adjunct to its argument
on discretionary dismissal. The court will deal with it as a separate
legal argument and in connection with discretionaray dismissal.
71
B. Application of Abbott Labs
The FTC also appears to argue that, even if judicial
review potentially is available, the corporate parties no
longer, if they ever did, meet the standards set forth in the
Abbott Loads trilogy for a court’s exercise of preenforce-
ment jurisdiction.” Justice Harlan focused on two ques-
tions in Abbott Labs: the fitness of the issues for judicial
decision and the hardship to the parties of withholding
court consideration. 387 U.S. at 148-49. The FTC notes that
the hardship to the parties in awaiting judicial determina-
tion of their claims in an enforcement proceeding now is
minimal. Since no notice of default has been issued, the cor-
porate parties face no civil or criminal penalties for non-
compliance. Indeed, the corporate parties no longer are on
the horns of a dilemma in attempting to decide whether to
comply or face stiff penalties; the risks of noncompliance
are ephemeral.”
The problem with tkis approach is that Abbott Labs es-
sentially involves a ripeness inquiry. See 387 U.S. at 148-49.
There no longer exists serious doubt as to whether these
preenforcement actions are ripe in the Abbott Labs sense.
Enforcement actions have been commenced; the issues
have been concretely framed. This court’s subject matter
jurisdiction is established by 28 U.S.C. §§ 1331, 1337. For
these reasons there is no point in the court reconsidering
the hardship issue under the Abbott Labs analysis, and
no reason to dismiss on this ground.
C. Sovereign Immunity
The FTC has moved to dismiss itself as a defendant in
the preenforcement actions on the ground that sovereign
immunity bars a suit against a federal agency eo nomine
unless Congress has granted such a right against the
* See A.O. Smith v. FTC, 417 F. Supp. 1068, 1082-85 (D.Del.
1976).
72
agency. The FTC claims that here no such authorization
has occurred. While the FTC may be correct in its state-
ment of the law,” it is incorrect in asserting that no Con-
gressional authorization for such a suit exists. In Scanwell
Laboratories, Inc. v. Shaffer,” the District of Columbia Cir-
cuit held that the judicial review provisions of the Ad-
ministrative Procedure Act serve to waive sovereign im-
munity:
It seems axiomatic to us that one must imply, from a
statement by the Congress that judicial review of
agency action will be granted, an intention on the
part of Congress to waive the right of sovereign im-
munity; any other construction would make the review
provisions illusory.
While the APA should not be interpreted to constitute a
waiver of sovereign immunity in suits seeking money dam-
ages against the United States,” in the context of this case
the court is convinced that the judicial review provisions
of the APA have waived the FTC’s sovereign immunity
claim, and the court accordingly rejects that argument.
D. Discretionary Dismissal
Finally, the FTC suggests that the court should exercise
its discretion to dismiss the preenforcement actions. It
asserts that the pending enforcement actions present a
32 E.g., Economou v. Department of Agriculture, 535 F.2d 688,
690 (2d Cir. 1976) ; Midwest Growers Coop. Corp. v. Kirkemo, 533
F.2d 455, 465 (9th Cir. 1976).
88 424 F.2d 859 (D.C. Cir. 1970).
547d. at 874.
%8 See Scanwell Labs. Ine. v. Thomas, 521 F.2d 941, 948 (D.C.
Cir. 1975).
** See Emerson Elec. Co. v. FTC, Civ. No. 74-746 (D.D.C. July
21, 1976) (Pratt, J.) (preenforcement claims may be raised as de-
fenses in enforcement proceeding.
73
wholly adequate forum for the corporate parties to raise
any defenses and claims they might have concerning the
LB and CPR programs.” It views the preenforcement ac-
tions as unnecessary baggage for the court to carry in light
. of the statutory enforcement actions. The FTC assures the
court that no prejudice to the corporate parties will flow
from a dismissal,"
The corporate parties oppose on several grounds. First,
since all the enforcement and preenforcement actions have
now been consolidated before this court, no risk of duplica-
tive judicial efforts exist. Second, they prefer consideration
of the issues raised by the LB and CPR programs within
the context of a normal civil action, in which no doubts
exist as to discovery or judicial review. Finally, the cor-
porate parties suggest that there simply is no need to dis-
miss at this point of the proceedings, and that the court
should avoid needless rulings.
In light of the fact that both the preenforcen.cot and
enforcement actions have been consolidatd, and in light
of the fact that counsel for the FTC stated in oral argu-
ment that the Commission does not seek an immediate deci-
sion on this motion, .ae court will defer consideration of
the motion to dismiss.” At a later time the court may be in
a better position to determine this issue, and later rulings
**The court tends to agree with the FTC on this point. Dis-
covery would be narrowly circumscribed in either action, so the
corporate parties would lose nothing by way of discovery. The
other identified concern of the corporate parties—the scope of the
court’s review of the programs—promises to be an important issue
regardless of in which action the court considers it.
%°The court need not defer consideration of whether to dismiss
preenforcement claims relating solely to the 1973 LB orders. As
Judge Schwartz noted, those claims are movt. A.O. Smith v. FTC,
417 F. Supp. 1068, 1074 (D. Del. 1976). This conclusion does not
affect claims challenging the 1974 LB orders that relate to the
development and implementation of the entire LB program, how-
ever.
74
by this court on other issues may render the court’s task
simple indeed. By deferring consideration of this motion,
the court will be able to consider both summary judgment
motions pending in these actions—and all arguments on the
merits contained therein.
Thus the court will deny the FTC’s motion to dismiss on
the three legal grounds asserted and defer consideration
of a discretionary dismissal.
III. Comprrotier GeneraL’s Motion to Dismiss
The Comptroller General moves to dismiss the preen-
forcement actions on the ground that the actions of the
Comptroller General pursuant to the Federal Reports Act,
44 U.S.C. § 3512, are not judicially reviewable.” The Comp-
troller General presents two primary arguments in support
of that conclusion: (1) Congress intended to preclude ju-
dicial review of the Comptroller’s decisions under the Act;
and (2) the corporate party plaintiffs have an adequate
alternative remedy in court. Because the court rejects both
these arguments for the reasons stated below, the Comp-
troller’s motion to dismiss will be denied.
A. Congressional Intent to Preclude Review
The Comptroller notes that the corporate parties claim
a right to judicial review of the LB and CPR program
orders under the applicable provisions of the Administra-
tive Procedure Act. 5 U.S.C. § 701-06. He contends that the
legislative history of the Federal Reports Act demonstrates
a Congressional intent that judicial review of his actions
under the statute be precluded.** The Comptroller bases
*°The Comptroller has moved in the alternative for summary
judgment, but the court prefers to consider the other issues raised
by the Comptroller at the same time as it considers the other
pending summary judgment motions in these actions.
*°The APA review provisions do not apply to the extent that
“‘statutes preclude judicial review.’’ 5 U.S.C. § 701(a) (1).
75
his conclusion that Congress took the unusual step of pre-
cluding judicial review on two major grounds. First, he
notes that the purpose of the Act was to prevent the ‘‘delay
and obstruction’’ that occurred when the Office of Manage-
ment and Budget, advised by the industry-oriented Busi-
ness Advisory Council, held the clearance function for inde-
pendent regulatory agencies’ special reports. Congress
transferred this clearance power to the General Accounting
Office to prevent the undue impairment of independent
regulatory agencies’ data collection efforts. Although the
Comptroller correctly discerns the motivation stirring Con-
gress to passage of this statute ** he fails to draw a viable
link between this policy goal and a statutory preclusion
of judicial review. Second, the Comptroller argues that
since the GAO has only 45 days in which to perform the
review function, after which the agency may proceed, the
conclusion that Congress intended to preclude judicial re-
view is further enhanced.
The Comptroller admits, however, as he must, that there
exists a presumption in favor of judicial review. This
strong presumption can be overcome only ‘‘upon a show-
ing of ‘clear and convincing evidence’ of a contrary legisla-
tive intent... .’’ ** The Comptroller has failed to meet this
heavy burden in this instance. At best, a court could in-
directly imply from Congress’ obvious desire to prevent
undue delays an intent to protect the Comptroller’s actions
from judicial scrutiny. This tenuous link, however, does not
constitute clear and convincing evidence of Congressional
intent to preclude judicial review; Congress was silent on
the matter, and the presumption of reviewability must
apply.
“' See H.R. Rep. No. 624, 93d Cong., 1st Sess. 31 (1973) (Con-
ference Report).
“744 U.S.C, § 3512(d).
*? Dunlop v. Bachowski, 421 U.S. 560, 567 (1975), quoting Ab-
bott Labs. v. Gardner, 387 U.S. 136, 140 (1967).
76
B. Adequate Alternative Remedy
The Comptroller also contends that the corporate parties
have an adequate alternative remedy in court against the
FTC. Agency action is made reviewable under the APA
when ‘‘there is no other adequate remedy in a court... .’’ “
This argument relies on the Comptroller’s conception of
the goals the corporate parties seek in pursuing this litiga-
tion. Since the corporate parties seek to prevent implemen-
tation of the LB and CPR programs and raise many of the
same issues against the FTC that they raise against the
GAO, the Comptroller reasons that a remedy against the
FTC would be sufficient. He suggests that the ultimate re-
lief sought by the corporate parties, a prohibition on the
use of the LB and CPR forms, can be obtained from the
FTC alone.
The court is not much impressed by this argument. The
Comptroller makes no claim that there is another adequate
proceeding in court by which the corporate parties can ob-
tain direct review of the Comptroller’s actions. Only in-
directly could the corporate parties challenge the actions
of the Comptroller if he is dismissed from the preenforce-
ment actions. Nothing in the APA precludes review of the
actions of two agencies that acted in concert merely because
relief may be available against one of them.“ Additionally,
it makes sense for the court to have before it the agency
whose actions are challenged so that its views may be fully
presented.** Moreover, relief against the FTC certainly
#5 U.S.C. § 704.
** The Comptroller claims, however, that section 704 requires only
an adequate alternative remedy, not necessarily an adequate alter-
native remedy against the same party. He cites for this proposition
no cases dealing directly with this question, though, and the court
feels that the adequacy of the alternative remedy necessarily is
partly determined by whether it can be obtained against the same
party.
“© Cf. Air Products & Chemicals, Inc. v. United Gas Pipe Line
Co., 503 F.2d 1060, 1062 (Temp. Emer. Ct. App. 1974).
77
does not necessarily mean relief against the Comptroller
General; for example, if the court should decide that the
corporate parties should prevail on an issue unrelated to
the Federal Reports Act, when the court would need make
no determination on the question of the Comptroller’s ac-
tions. In all, the Comptroller has not presented a convinc-
ing case for dismissal on the ground that an adequate
alternative remedy in court exists.
IV. FTC’s Morton ror More Derrnite STaTeMENT
or CoUNTERCLAIMS
The FTC moves the court to require a more definite
statement of the counterclaims asserted by the corporate
parties in the enforcement actions. The corporate parties,
in their answer to the Commission’s enforcement position,
have incorporated as counterclaims all claims asserted by
all parties in the preenforcement actions.” The FTC ob-
jects to this shotgun approach “* to pleading counterclaims
on several grounds, and desires a more definite statement
before framing a responsive pleading.
First, the FTC argues that it is unclear whether the
corporate parties intend to do more than assert affirma-
tively their claims concerning the validity of the actions
taken by the FTC and the GAO. If not, the Commission
reasons, these are simply improperly denominated de-
fenses and require no reply; if so, the FTC will have to
respond. There is little doubt in the court’s mind that the
corporate parties’ counterclaims seek affirmative relief
against the FTC and GAO in the form of declaratory judg-
ments and permanent injunctions.
*" Preenforcement plaintiffs incorporate all claims they have as-
serted while respondents not involved in the preenforcement cases
incorporate all claims of all preenforcement complaints.
**The FTC asserts that there are 44 preenforcement actions and
30 intervention complaints in the LB litigation, and 23 preenforce-
ment actions and 24 intervention complaints in the CPR litigation.
78
Second, the FTC contends that the counterclaims resur-
rect dead issues, insofar as they seek to assert claims not
addressed by the corporate parties in their pleadings be-
fore this court. Although the FTC believes that claims not
raised in the partial summary judgment motion or discov-
ery outline have been waived, the court has decided to the
contrary. Order of November 4, 1976.
Finally, the FTC argues that the counterclaims are vague
and ambiguous. Many of the corporate parties were not
involved in the preenforcement actions, and wide differ-
ences in those complaints exist. Many could not have joined
in all the claims because of factual differences, failure to
exhaust administrative remedies, and other reasons. The
FTC’s objection to the validity of the counterclaims, how-
ever, should nvt be an important factor in a motion for a
more definite statement. If some parties cannot sustain cer-
tain claims for the reasons mentioned by the Commission,
those arguments can be raised by the FTC in its responsive
pleading. |
The court is of the opinion, however, that in some re-
spects the counterclaims fail as ‘‘short and plain state-
ment[s]’’ of the claims asserted.” Where such a large
number of preenforcement complaints and motions to in-
tervene have been filed, at the least the corporate parties
should present a single list of all the claims they wish to
assert as counterclaims, rather than put the burden of
finding and answering each of the preenforcement com-
plaints on the Commission. The court would itself prefer
to work with a single listing of all counterclaims. The court
hopes tha. the corporate parties will exercise judgment in
compiling this single list, so that identical claims are con-
solidated and obviously unmeritorious or moot claims (such
as those concerning only the 1973 LB orders) are elimi-
nated.
/8/ Tuomas A. FLANNERY
Unirep States Disraror Jupaz
Dated: January 21, 1977
FR. Civ. P. 8(a).
79
(Caption OmiTTEeD IN PRINTING)
(Firep January 31, 1977)
Order
In accordance with the attached Memorandum Opinion,
it is, by this court, this 21st day of January, 1977,
Orperep that the corporate parties’ motion to dismiss the
enforcement actions be, and the same hereby is, denied,
except as to the corporate parties challenging personal
jurisdiction (besides Fairmont Foods), as to whom the
court defers decision on the motion to dismiss; and it is
further
OrperepD that the motion for a protective order submitted
by the corporate parties challenging personal jurisdiction
be, and the same hereby is, denied; and it is further
OrvereD that the FTC’s motion to dismiss the preen-
forcement actions be, and the same hereby is, denied as to
all grounds supporting it other than discretionary dismis-
sal, and as to the discretionary dismissal issue the court
defers decision; and it is further
OrpereD that the Comptroller General’s motion to dis-
miss be, and the same hereby is, denied; and it is further
OrpereD that the FTC’s motion for a more definite state-
ment of counterclaims be, and the same hereby is, granted
to the extent that the corporate parties shall submit a
master list of all claims asserted by way of counterclaims
in the enforcement actions no later than February 4th,
1977.
/8/ THomMas A. FLANNERY
United States District Judge
80
(Caption Omitrep in Printin@)
(Fmep Aprit 12, 1977)
Memorandum Opinion
The court presently has before it consolidated pre-
enforcement and enforcement actions concerning the
Federal Trade Commission’s orders directing numerous
companies to file certain special reports. At issue are the
FTC’s information-gathering activities with respect to the
1974 Line of Business (LB) report and the Corporate
Patterns Report (CPR) survey. The. court already has
considered various motions to dismiss. Order of Jan. 31,
1977. The FTC and the Comptroller General have moved
for summary judgment at this time, while the corporate
parties seek partial summary judgment. Oral hearings
on these motions were held February 11 and 25, 1977,
and the motions are ripe for consideration and decision
at this time.
The corporate parties challenge the enforcement of the
FTC’s orders to file the LB and CPR forms on a number
of grounds. The court will consider each of these claims
in turn. An appropriate order accompanies this memo-
randum opinion.
I. Statutory AuTHORITY
The corporate parties contend that the FTC lacks the
statutory authority to implement the LB and CPR pro-
grams. This claim centers on an interpretation of section
6 of the Federal Trade Commission Act, 15 U.S.C. § 46."
.* Section 6 provides, in relevant part:
The Commission shal] also have power—
(a) To gather and compile information concerning, and to
investigate from time to time the organization, business con-
duct, practices, and management of any person, partnership,
or corporation engaged in or whose business affects commerce,
excepting banks and common earriers subject to the Act to
81
While the corporate parties admit that section 6 relates
to the general power of the Commission to conduct in-
vestigations, require special or annual reports, and pub-
lish the results of its investigations, they argue that
section 6 is not an unfettered grant of authority to con-
duct any type of investigation or information-gathering
project. To the corporate parties, section 6 grants the
authority to investigate, so long as the investigation is
related to the FTC's enforcement authority, but does not
grant the power to conduct statistical reporting programs.
In support of this proposition, the corporate parties offer
an imaginative interpretation of the legislative history
of the Act and relevant judicial decisions.
The linchpin of the corporate parties’ argument is that
the LB and CPR programs are not focused investigations.
If not investigations, they contend, then the section 6(b)
special report orders do not relate to the Commission’s
section 6 (a) power of investigation and do not relate
to the Commission’s quasi-judicial powers under section
5 of the Act. Since the FTC admits that the LB and CPR
regulate commerce, and its relation to other persons, partner-
ships, and corporations.
(b) To require, by general or special orders, persons, part-
nerships, and corporations, engaged in or whose business affects
commerce, excepting banks and common carriers subject to the
Act to regulate commerce, or any class of them, or any of
them, respectively, to file with the Commission in such form
as the Commission may prescribe annual or special, or both
annual and special, reports or answers in writing to specific
questions, furnishing to the Commission such information as
it may require as to the organization, business, conduct, prac-
tices, management, and relation to other corporations, partner-
ships, and individuals of the respective persons, partnerships,
and corporations filing such reports or answers in writing.
Such reports and answers shal] be made under oath, or other-
wise, as the Commission may prescribe, and shall be filed with
the Commission within such reasonable period as the Commis-
sion may prescribe, unless additional time be granted in any
ease by the Commission.
82
programs are broad-based and not aimed simply at sus-
pected violators, the corporate parties reason that they
cannot qualify as legitimate investigations. Instead, these
statistical reporting programs are more in the nature
of a fishing expedition; the corporate parties charge that
without a direct link to the Commission’s substantive
responsibilities these section 6(b) orders could intrude
indiscriminately into the private domain.
The corporate parties suggest that the legislative his-
tory of the FTC Act supports the view that section 6
was intended only as an aid to section 5 powers. Without
exhaustively repeating the arguments of both the cor-
porate parties and the FTC on this question, the court
can reject the corporate parties’ claim to the extent that
it suggests the FTC was intended to be only a quasi-
judicial agency with information-gathering
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