Respondents Answer and Brief in Support — Federal Trade Commission v. Bunte Bros.

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, : CHAR GS ELM OSE Cavey

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~ SUPREME COURT OF THE UNITED STATES

Ocroser Term, A. D. 1939. _

No, 10M) 25

‘FEDERAL TRADE COMMISSION,

a . Petitioner, .°

" ws. | ,

BUNTE BROTHERS, INC., ise

a o ~~ Respondent.

RESPONDENT'S ANSWER AND BRIEF IN SUPPORT

THEREOF IN OPPOSITION TO PETITION FOR —

WRIT OF CERTIORARI TO THE UNITED STATES —

. CIRCUIT COURT OF “APPEALS FOR THE SEVENTH |

CIRCUIT.

| Tuxopore E. Rein, »

ae ; SamuszL G. Ciawson, | |

5S Ay eee 7 Attorneys for Respondent.

arp es 7 bee . ®« \ \ 4 - -_ - foe hf easyer pene

a -

BLANA

é *

INDEX

PAGE

Statement ............--. mane Ee aesessesvesconsesescenescongeossceneecseae 2

Question Presented snsenesncscesascensasensseucnucsnseecensensenses iiebee o£

Argument Against oiailie the Writ :...........-..-.-- 6

L ‘The case presented by the petition and the

_ question involved are not of such general public

importance as necessitate 1 review and decision

» by this court ........ 5 cidiaaenepeliehebeeigueesssemnietagunaatenaaseet’ 6

II. The decision of the court naloer: followed the yi.

| settled law as to which there is no conflict........ 8

III. The decision below is wholly consistent with

decisions construing other statutes regulating

interstate COMMEFCE .......-.------------secee sere teeeeneeeteeees 16.

Conclusion. ............ wsesecnseneveecnnfpcteeconssnncsserovesnvesenvenenesguaseqniee +. #1

TaBLe oF CITATIONS.

Cases

Abousf v. Spreckels Co. (D. ¢. Cal. L),: 26 Fed. Supp. »

GI, GBB oases neingecescscensrececcesthionnccenjecvoresehinglanvenepwedovesnones : 30

' American Can Co. v. Ladoga Canning Co. (C. C. A. 7

7), 44 Fred. (20) 'TGB .2nccp.cnccL. ig -nnncheecniiecnes} inseseentoinisetoovons 26

American Tobacco Co. v. Federal Trade Commis- ;

. sion, 9 Fed. (2d) 570, 582 ..............--.-caccece-ceceenseseessones _ .%

Andrew Jergens Co. Vv. Woodbury (D. €. Del. ), 271 :

VOD HED agp cncencciccfhiveevesgsionnveStnapecovssesovepbecouboesyncenencoteonwens 30 .

"Apex Hosiery Co. v. inde, se U. S. pees _ 84Law.

ed. (Advance Sheets) 913 o......:.....cccsssssscecssatenseeeseeseees 17, 29

‘. ae : 7 |

Po, c : : PAGE —

TABLE OF Crrations. a Ee ae

7

Cases (continued)

B. S. Pearsall Butter Co. v. Federal Trade Commis-

sion (C, C. A. 7), 292 FY. 720, 722 .....:.,....ccc-cecescocteeei 99

Blankenship, v. Kurfman (C, C. A. 7),,96 F (2d)

Fy Fact eC CM Ne A 17,5 1

Blumenstock Bros. v. Curtis Pub. Co., “959 U. 8. 436, a

EE 30

Bunte Bros. v. Federal Trade Commission (C. ©. A. 4

_7), 110 Fed. (2d) 414 Pee rc ee |

C. E. Mevens Co. v. a & Kleiser (C. C. A. 9), §

al i aconcenieendaonnconsades 30 |

California Rice Industry v. Federal Trade Commis- ;

-. \.sion (C. C.-A. 9), 102 F. (2d) 716... eeseccneseesoeens 15

ee Oil Co. v. Federal’ Trade Commission | w

(C. CA. 6), 274 Fed. 571, 574, 575 ........... di ccibiaiastiad 16

’ Chamber of Commerce of Minneapolis v. Federal

4 Trade Commission, 13 Fed. (2d) 673..................--» 12.

Chicago & Eastern Ill. Railroad Co. v. Industrial —.

Commission, 284 U. S. 296, 299.0... ..eeeeeseees 18.

Cohens v. Virginia,6 Wheat, 264, 399; 5 Law. ed. .

257, 290 ........ is SAO EAR ONE EE ASD poteciomcbrtiinvecie 14°

| } F

‘oie States -Lumbeé Co. Y. United Btates, 234

8 ERS RRS SOR mn aco 11 -

Frie Railroad Co. v. Welsh, 24% U.S. 303, 306 arte ae

Ewing-Von Almen Dairy Co. v. 6._& C.-Ice Cream. |

Co. (C. C. A. 6), 109 Fed. (24) TAR eee aan 80

Federal Trade Commission ‘v. Claire Furnace Co. |

(C. A. Dist. Col.), 285 Fed. 936, 941...........2..... 16

. Federal Trade Commission ‘v. Curtis Publishing Co:

260 Me S. I I cach tesctsanciicldicesdtcinnnieticidscciinn revere

| iit |

“Taste oF CrraTions. | F ee | |}

Cases (continubd) . Serr aes

Federal Trade Commission | v. Gratz, 253 U. S. 421, : | i

8. <4. PEE AM ee ae Pee Naar SE 29 ree

Federal Trade Commission v. Paramount Fue |

Lasky Corp. (C. C. A. 2), 57 Fed. (2d) 152, 157...... 29 |

Federal - Trade Commission v. - Raladam Co., 283

Be ee ie rceescenccrceieaitstnnniaininncleoanonitetanpyainhiseipepitaciniicnialge 6, 8; 9 7

- Federal Trade Commission v. Royal ane Co., bf oe A.

288 U.S. 212................ ss canes iaelisoe ocedscmdcaueliepeuialicaencas 2 rn “

Federal Trade Commission v. ‘Sinclair Refining Co. bs rat

261 U. S. 464, 473......... iceeeatiesiuniccnicl tae casiadaediieiledsiedasaa @ *

Foster & Kleiser Co. v. Special Site Sign Co. (C. C. A cae

9), 85 Fed. (2d) 742......... sauces tceccbasaseenbaiigitaindetailichiiaiases ‘30°

Houston & Texas one Co. v. United et 234°

Industrial Ass’n of Ban Francisco v. United States,

268 U. S. 64, 80......... sasiiaiseadiaasigbeachipsinanlienedinaliog seecuciadiblins 80

Leader v. Apes Hosiery Co. (C. COA. 3), 108 Fed. .

Se Tr ae.

Levering & arrigues Co. v. ‘Morrin, 289 U. S. 103, ; :

Oe aa caaadiguanans 80.

Lipson v. Socony-Vacuum Corp, (C. C. A.1),76 Fed. | |

(2d) 213, 216, ee ee ee ae - 26

_ Loewe v. Lawlor, 208 0.8763. Oe

Moore Vv. New York Cotton Exchange, 270 DU. S. 750.. “30

aah: United States, 229 U.S. 373 Seditisnisavacieciuaaion see te 12

National Harness Manufacturérs Ass’n v. Federal . .

Trade Commission, 268 Fed. 705.00... 11

4] ’ PAGE §

1 ” |

! TABLE OF CrraTions. eer ;

i : Cases (continued) '

ae | N.L.R.B. v-Fainblatt, 306 U. 8. 601, 607.....:....... ud

al le ia N.L. RB. B: v. Jones & Langhlin Steel Corp., 301 U. S..

ata “ 1, ee MOTE. VO Oh OT RTS L ER, MER

1a : | Pie 2 :

aad | Port & On-y. Girdler, (N. Y. Sup. Court, Nov. ;

i) | 1939) CCH Trade. Regulations No. 25,347. aaa a) a

i ' Schechter v. United. States, 295 U. 8. 06. 8 i

i . Shanks.v. Delaware L. & W. R. Co., 239 U.S. 556, d08 =s«18

t | Stafford v. Wallace; 258 U.S. 495 2 eccceseeseecee |

| Swift v. United States, 196 U S. ae Sei

, United Leather Mitiated. Herkert, 265 U. S. 457, 471

’ United States v. F. W. Darby Lumber Co. — + A

. Ga.)f 32. Fed. Supp. 734, 787 020

United States v. Great Western Sugar Co. (D. c.

' Nebr.), 39 Fed. (2d) 149, 151 ....... ie Pe IE Et

United States v. Southern California Wholesale Gro-

cers Ass’n (D. C. Cal.), 7 Fed: (2d) ovat ee

Utah-Idaho Sugar Co. v. Federal Tradé aaenenen

-(C. C. A. 8), 22 Fed. (2d) 122, 125 eschaneietienaannebeaseial .

Ward Bohing Co. v. ‘Federal Trade Cenniaden (C. -

©..A, 2), 964 Fed. $90 3.) |

| Winslow. Federal Trade acta ein (C.C. £ Ath),

277 Fed. 206 Py i AS ders Ue hecenstcccuas RES ROIS MPO

oh rc —_ POPS

ie N aONEVENEDN ECS ARY LINIH E f NE TRENT LOIRE PRE: HD aR ad ,

7 Vv ,

, PAGE

STATUTES.

Clayton Act, 38 Stat. 7305 15 U. 8. C. See. | a ae

Fair Labor Standards ae, 52 Stat. 1060; 29 U.S. C.

- Sec. 205 ecacesceencenbecencacseeteeeeeeesessecneeeetessaecsnsnascseterssescssosares 19

Federal Employers Liability Act, 35 Stat. 65, 53 Stat. ;

DAE Gs Cg I ons ericestectcrenrepsntticarecvnrenecesees 18

Interstate Commerce Act, * Stat. 474; 49 U. S. C., |

Bet. D. aeicceacraveerssneererecevonesevevest tverspenisonjocrneattiamresonteetecesonie 19

National Labor Relations Act, 49 Stat 449 ; 29 U.

. &£C,, Sec. 151 ........... vesscsseneecnienessomnenectesnelsenseneeconennecnnsenes 17

| Sherman Act, 26 Stat. 209; 15 Us 8. ©. eee - ae

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SUPREME COURT OF THE UNITED STATES

OcroBER Term, A. D. 1939 mS

>

‘

No. 1021

FEDERAL TRADE COMMISSION,

, “f Petitioner,

vs. es

- BUNTE BROTHERS, INC, _ |

i | Respondent.

*

4

.

RESPONDENT'S ANSWER AND BRIEF IN SUPPORT

‘THEREOF IN OPPOSITION TO PETITION FOR

_ WRIT OF CERTIORAR§ TO THE UNITED STATES

Ps crRCUTT.. COURT or APPEALS FOR THE SEVENTH

2

a ee

Answering the petition of Federal ‘Trade Commission,

for a writ of certiorari to the United States Circuit Court

' of Appeals for the Sevemjth Circuit, the respondent, Bunte

‘Brothers, Inc., respectfully states that the writ of cer-

‘ tiorari should hot issue out of this court to review the de-

eree of the United States Cireuit Court of Appeals for

the Seventh Circuit, entered on February 20, 1940, in

which decree the court vacated and. set aside an order ~~

of the Federal Trade Commission requiring the respond-

ent to cease and desist from alleged unfair methods of ~

competition in connection with intrastate sales of mersann-

: dise within the State of Illinois. — ;

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“Statement?

So that this: court may have before it at once the exact i

terms of the i’ederal Trade Commission’ s order to cease

and desist, which-was vacated by the decree of the Circuit ;

_ Court of Appeals, it is herewith set forth in haec.verba:

“It Is Ordered that. the respondent, Bunte Brothers,

Ine., a corporation, its officers, directors, agents, rep-

resentatives and employees, in the offering for sale, |

sale.and distribution of candy, in the State of + iinet, :

do cease and desist from:: | Ss |

(1) Selling and distributing to dieadens candy or —

_ other confections so packed and assembled that sales ©

of such candy or other confections to the general public

, are to be made or may be made by means of a lot-

- tery, gaming device or gift: enterprise; _

(2). Supplying to or placing i in thezhands of deal: |

!

}

ers assortments of. candy or other- ecnfedtions which

are used or which may be used without. alteration or

rearrangement of the contents of such packages or as-°

sortments to conduct a lottery, game of chance or |.

gift enterprise .in the sale and distribution of candy

or other “confections contained in said assortments; I

‘¢(3) Packing or assembling in the same assort-

‘ment. of candy for ‘sale, to the . public at retail, pieces ~

‘of candy of uniform size and shape with different —

colored centers, together with larger pieces of caridy, |

which said larger pieces of candy are to, be given as |

» prizes to the purchasers. procuring pieces of candy.

'. with centers ; of particular colors. .

Tt Is Further Ordered that the respondent shall,

‘within sixty (60) days after service upon ‘t of this

order, file with the Commission a report in writing, —

‘setting forth in détail. the manner and form in whieh 4

eo -it has complied with this order’? (R. 318).

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3

It is thus ‘immediately seen that. the acts ‘enjoined by

~ the order of the’Commission are intrastate in every aspect.

The restraint imposed upon respondent by the. Commis-

sion’s “order relates to respondent’s intrastate activities | -

_ as tg goods manufactured in Illinois, packed in Illinois, ©

gold ‘in Illinois and consumed in Illinois. In consider-

ing petitioner’s statement of the case (Petition p. 3) it

must be borne in “~1, therefore, that every questioned

act°and transaction vu. respondent-is invested with this

a

intrastate character. © . ,

Petitioner’s: assertions as td the morals or ethics of

respondent’s intrastate busingss have no place in this

‘proceeding. The findings of fact by the Commission were

challeriged in the Circuit Court of Appeals as vague and

unsupported conclusions. They. were challenged, more-

over, upon the ground that they did not constitute -juris-

dictional foundation for the order to cease and desist.

The court below; however, did not adopt these findings

but examined .the case as presenting, essentially, a. ques-

tion of law ‘involving the interpretation of the Federal -

Trade Commission. Act. It is this construction of the

statute which petitioner seeks to review.’ Should the ne-

. cessity again arise respondent will, of course, reassert.

its position as to the insufficiency. of the findings of fact

to sustain the jurisdiction of the Commission - under any

~ construction of thé Act.

The actual issues deéided by the court below is clearly

. reflected in the following quotations from the. court’s

opinion : |

_

‘Our oncasibis may be stated thus: Is an order

directed to an Illinois candy manufacturer engaged

in distributing its product in the State of Illinois valid,

which commands it to cease and desist from certain ©

— unfair practices in the ‘sale and distribution of its

candy im the State of Illinois?’’ (110 Fed. (2d) 414.)

5

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Answering this question, the court concluded: :

‘“That the Dhase of petitioner’s business wherein /

its practices are unfair is wholly intrastate. ed

phase of petitioner’ s business which is conducted

wholly in Illinois; by an Illinois: corporation, which a

makes and sells its product i in Illinois. It is not with.

in the purview of Section 5 of the Federal Trade Com.’

mission Act. (110 Fed. aay 416.)

In deciding the instant case upon the ann that the.”

order of the Commission, on its face, attempted to regulate ;

purely local sales of the. respondent over which the Com-

mission had no jurisdiction, the Circuit Court did not stopto

consider the sufficiency of the findings of the Commission. |

In other words the court’s conception of the controversy

presented to it for decision did. not embrace. the consid- -

eration of the findings of fact, their jurisdictional sufi-

: ciéncy or the evidence upon which the findings were predi-

cated. Conceding the question to be one of law, the. court

found it. unnecessary to analyze the findings or the evi-

dence, a step in the judicial process which Would have

been necessary. only in the event that the court gave to |

the statute the broad construction urged by the Commis-

sion. Had the court agreed with the Commission and ~

given the statute the extended scope requested, then only ©

would it have been necessary for the court to give cdnsid- ©

eration to, and to pass upon the sufficiency of, the findings. §

of fact, challenged as they are by the respondent.

\

- Question Presented.

The statement of the question presented, appearing on

page 2 of the petition, does not, in its generality, ade-

' quately specify. the issues necessary. to a, complete deci- :

sion of the controversy. As phrased by petitioner, the

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question assumes evidentiary support for the. findings yi

the Commission. This assumption appears in the lan-

guage contained in the question, ‘‘which reduce the quan-

tity and divert the course of. interstate sales and ship-

ments’’. The reduction in quantity and the diversion of

‘commérce is thus assumed by petitioner’ s question to be

the direct rather than the indirect or incidental: conse-

quence of respondent’ s intrastate practices; withreut re-

gard to the presence or absence of ‘additional evidence

proving - the necessary . causal connection between sueb

practices and the alléwed reduction and diversion..

A complete review of the validity of the order of the

Commission which was vacated by the Court of Appeals

would include, a the determination of the follow-

‘ing question: :

Are .purely «local trade practices which ‘through. «

local competition’ result in incidental reduction of the .

quantity of ingerstate sales, such activities as would

_ comme within, the scope of a federal regulatory statute

even if such statute attempted to control intrastate ’

acts affecting interstate commerce? -

Should the a arise, as h ‘hia said, respond-

ent will argue its vie is subject. For the pur-

pose, however, viairts upon this application for the

writ of certiorari, it is probably —, to decide only

the following. question:

Did Congress, under the language ; of Section 5 of:

the Federal Trade Commission Act, invest the Com-

' mission with jurisdiction over methods of competition

not practiced in the course of interstate commerce

but which, on the contrary, are used wholly -in con-

neetion with intrastate traiisactions and which, at..

most, affect, in‘ some manner, the business of others

engaged. in: interstate commerce?

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ARGUMENT AGAINST GRANTING THE WRIT.

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The case presented by the petition and the ‘question in.

a — are not of such general public importance as

- necessitate review and decision by this court.

In assigning as the reason why ‘this court, should grant

the writ of cértiorari, petitioner asserts that the question

»presented.is of public importance meriting review by this”

court. Petitioner, alleges that the. Federal Trade Con-

mission Act ‘‘was intended to ‘protect : all interstate com-

petition from the evils of unfair practices.’ This’ petitio

principii assumes that such alleged unfair practices did -

themselves cross state lines as they did in Federal Trade

Commission v. Raladam Co., 283 U. S. 643, the decision re- §

lied upon by petitioner in. this connection (Petition p. 6). |

In thie. Raladam case, this-court succinctly stated the :

necessary prerequisites of the Commission’ S \ Jurisdiction 3

o—

as follows: ba

a Te That the ‘eine complained of are unfair’ ‘

( 2) that they are methods of competition in commerce; ©

(3) that a proceeding by the Commission to prevent |

the use.of the methods appears to be inthe eee

of the public’’ (pages 646, wid ;

It must be assumed that the teaialates in enacting the

statute recognized as being of public importance those |

things which the scopé of its own language covered. It, |

is not enough merely to state that a case presents a ques: |

tion of public importauiee. It must disclose an issue of

_ public importance in matters within the contemplation. of

a given statute. Innumerable questions are conceivable

of the gravest natjonal concern which properly commend

~ themselves’ to legislative consideration. But, until the

legislature has acted, they are not matters for the courts

to consider. The effort of the Commission to stretch the

_ empowering - clause of the Act may be of. importance. to

the Commission 4 its attempt to enlarge. its’ jurisdiction,

‘but it does not constitute that sort of public importance

arising i in caseg ‘under statutes already enacted and prop-

etly presentable for decision to thé courts.

The asserted claim of. public importance does not arise

out of the necessity of’ protecting interstate commerce

-but- is, rather, a elf-created slogan whereb the Com--

-enlas ged that it would cover almost any imaginable phase

of commerce, whether interstate or intrastate in nature.

_In Federal Trade Commission v. Raladam Co. ., it is i“

be noted that. one of the necessary prerequisites of the

Commission’s jurisdiction is that the methods complained

of ‘‘are methods of competition im commerce.’’. ‘‘Com-

merce,’’ of course, must be understood as ‘‘interstate com- :

merce’’ according to the language of Section 4 of the .

statute. | Bis :

In thi later case of Federal Trade bua v. Royal

Milling Co,, 288 U. S. 212, this court itself restated the

second prerequisite of ‘the Commission’s jurisdiction, |

_ changing the expression ‘‘in commerce”? to the phrase ‘in

interstate commerce,’’ making the clause read that the “

methods complained of ‘‘are methods of competition in

| interstate commerce.’’ (Opinion P. 216.)

4 | ;

This. court, ‘in the Rdadén. case, was codveful to ‘state

that::

“Official: powers cantat be iia aeieel the

terms and. necessary implications of the grant. If

broader powers be desirable, they must. be conferred

| by Congress. They cannot be merely assumed by ad-

_ mninistrative officers; nor can they be created by the

courts in‘ the proper exercise of f their judicial fune-

‘tions.”’ (Page ‘649. aan ay.

_—Tf it be teen ‘as netitioner contends, that the decision

bah severely limits the power of the Commission to

‘protect interstate commerce, such’ limitation results from

deliberate Congressional definition. ‘The contention, there-

_-fore, that.a question is presented of ‘‘first importance” to

the Federal Trade Commission constitutes no legitimate

-reason for review by. this: court. The instant effort of

the Federal Trade Commission to enlarge its power be-

; : yond its grant of authority was repelled by the decision

of the Circuit Court of Appeals. After: this reiteration

of the limitation of the. Commission’ ~ jurisdiction, no issue

| necessitating a dscision by this court remains.

II.

The ‘decision’ of the court below followed the settled law

: as to which there is no conflict.

It is. conceded that the merchandising ‘methods of the

- respondent) enjoined by the. cease and desist order of the

Commissio did not cross state lines, but were ‘wholly

‘intrastate /in. nature. To sustain the order, therefore, it

_ became incumbent upon petitioner “to take the position that

these intrastate practices, while not performed ‘‘in com-

_ merce’? (meaning in interstate commerce), did, never-

See

“hilesa, affect interstate transactions of would-be coniipeti- ,

tors. The court below concluded that. the language. of

Section 5 ‘of the Federal Trade Commission Act, ‘Sin com- —

“merce,”” was not the-equivalent of ‘affecting interstate _

commerce’ but, on the contrary, . referred top activities —

< themselves. practiced in interstate commerce. :

In so deciding, the “Circuit: Court of Appeals {cllotwed

* the specifically expressed: intent embodied i in the Act itself,

by the Congress in the terms of tlie enactment. It fol-.

lowed and observed, moreover, the distinction between the

language ‘‘in commerc¢e’” and ‘affecting interstate com-

merce’? announced by this court in Schechter v. United

States, 295 U. S. 495, where the court held that the words

‘in?’ and ‘‘affecting’’ have different connotations and that

the term ‘‘affecting’ interstate commerce’’ conferred cer-

tain powers over intrastate. activities, while the term ‘‘in

commerce’” restricts the scope of tle: statute to activities .

in the current or flow: of interstate comimerce. This por-

‘tion of the opinion by this court has been.in no way modi- x

‘fied by its later decisions (opinion 542, 544).

- As has been heretofore pointed tut. (supra), this court,

| in Federal Trade Commission v. Raladam Co., 283 U. 8S.

643, 646, and in’ Federal’ Trade Commission v. Royal Mill-

, ing Co., 288 U. S. 212, 216, again unmistakably asserted

that, ‘‘To come: within the condemnation of the statute

' methods charged as unfair must be ‘methods of competition |

in interstate commerce.’’’ (Italics supplied.) ,

Hewing ‘to the line thus established by this court, the :

court below said: (Bunte : Bros. v. Federal Trade Commis-

sion, 110 Fed. 24 414):

‘We are on secure. and undisputed ground, when we

assume that an ordér of the Commission to be valid

must be supported ed evidence wae deena ta (1)

‘10

The methods used are unfair; (2) The methods of : |

- competition: condemned must’ be used in interstate ,

commerce;.(3) The proceeding by the Commission to

" prevent the use of the methods must be in the interest *

_ of the public. Federal Trade Commission v. Royal .

_ Milling Co., 288 U. S. 212, 216, 53-8. Ct. 335, 71

ey Ed. 106. a: .

’ Confronted by the limitation wpe its power in the |

language of the Act and by the decisions of this court as

_well as by the decisions of various Circuit Courts of Ap-

_ peals; attempt was made, at the behest of the Federal -

Trade Commission, to amend the aah, to make it apply to

unfair methods of competition ‘ ‘in or affecting’’ inter-

state commerce. On recoiisideration ‘of Senate Bill 94,

74th Congress First ‘Session, the language ‘‘in or affect-

ing’? commerce was objected te as too broad in scope.

_ (Congressional Reeord, Vol. 79, pt. 2, pp. 1842,.et seq.)

-. The Bill was re-introduced during the Second’ Session :

. of the 74th Congress (Senate Bill 3744). with the words .

“or affecting”’ significantly and deliberately left out. This *

_. is the statute which was finally adopted in 1938 (52 Stat.

' 491). 3

cs ‘Thus, it appears that Congress was fully aware of the

distinction between the language ‘‘in commerce” and ‘‘af-

. fecting commerce.?’- Its original enactment had been con-

strued by the Supreme Court which observed and confirmed :

the original legislative definition. After all of: which, the

_ Congress, being fully advised, rejected as too broad and :

all-inclusive the expression ‘‘affecting commerce.’ :

The decisions relied upon ‘by petitioner as being in con- |

flict with the decision of the ‘court below fail to sustain .

petitioner’ 8 ‘contention 1 that. such a conflict exists. To con- .

stitute a conflict of decisions, it is, of course, necessary that .

a

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‘on décisioxs deal with Gabetantislly like situation and |

decide substantially identical questiors. It should, there-

! fore, be remembered that: the decision of the court below

‘dealt with certain local sales practices by a single can

manufacturer whose product was made; sold, distribute

7” consumed within the State of Illinois. ;

On the other hand, in N ational Harness Mfrs.’ prs

tion'v. Federal..Tradé Commission, 268 Fed. 705, which

‘is relied upon by petitioner as conflicting with the deci-

sion of the court below (petition p..7), there existed a na-

tionwide ‘conspiracy between the members of the Associa-

tion in violation of the Sherman Anti-Trust Act. The re-

spondent, Wholesale Saddlery Association, consisted of: —

persons and concerns’ engaged in selling harness and sad-_

-dlery goods in interstate commerce throughout the various

_ states’ and territories of the United States. The respond-

ent, National Harness Mfrs.’ Assqgciation, was composed

of concerns who: purchased their supplies’ of harness and-

saddlery goods from wholesalers. and jobbers in interstate

‘commerce, including members of the Saddlery Association.

It was found that the officers and members of both asso-

ciations co-operated by means of combinations and agree-

'. ments extending throughout the various states to impose .

certain restrictions upon the: interstate business in har-

ness and saddlery: goods (page 710).

The facts in that case are, therefore, so plainly dis-.

similar from the facts in: the. instant case that the language

of the court quoted by the petitioner has no applicability.

Moreover,. when the quoted portion of the opinion is read —

-- in its context, it appears that this language of the court:

was merely in answer to the contention that the challenged |

activities of the respondent did not constitute commercial

activities. This contention the court answered by refert- -

ing to the cases of Loewe ' v. Lawlor, 208 U. S. il ‘Eastern

States Lumber Co. v. Sted ‘Atates, 234 U. S. 600; and - ;

Nash v. United States, 229 U. 8. 378, where it was held

that persons’ conspiring with the intention of restraining 4

-interstate © commerce are guilty ‘of: ‘violating. the . ‘Shermay :

' Anti-Trust. Act without being: themselves - engaged ina.

~ commereial octupation: :

- Since the Commission, of course, has power to institute

; ; - a proceeding for a violation of the Sherman Act, the court &

was clearly correct in affirming the cease and désist order

_ based as it was upon. a proved ini ringemgat of the Sher-

ts.

>

- man Act. |

8

‘Chamber of Commerce of Minneapolis v. ut ee

” Onin 13 Fed. 2d 673, (petition p. 7) involved a pro- -

’ ceeding by the-Commission charging that the members of

the Chamber were engaged in a conspifacy among them-

selves and with others to boycott and, refuse to deal with -

the St. Paul Grain Exchange or its members, or the Equity

_ Co-operative. Exchange, or the customers of any of them.

Against the contention of - respondents in that case that

the Chamber ¢was not engaged in: interstate commerce,.

~ the court held that that body. was ‘‘an instrumentality ‘in-

the current of interstate, commerce’? and, : consequently,

that its members were ‘Shgagid i in the operation of an in-

strumentality of interstate commerce. In so holding, the

court cited and relied upon previous adjudications by. this

court -to the effect’ that stock or commodity exchanges, \

. stockyards, etc., constitute channels or throats of the cur-

' rent of flow of interstate commerce. Hence, the practices’

complained of in the Chamber of Commerce case occurred

directly in the stream of interstate commerte which was

“ handled’ and controlled by the respondents - themselves.

This is di ametrically opposed tothe facts of the instant

-ease in which the challenged commerée of the respondent

is acauittedly wholly “intrastate. “° |

. i

. 13

.. In addition, in the Chamber of Commerce case, the court

found that the officers and .members of the respondent

} organization ere ‘engaged. in a conspiracy to restr&in

| interstate commerce, thus directly contravening the pro-

hibitions of the Sherman Act. The ‘proceeding of the. °

Commission thus being founded upon a violation of, the

- Sherman Act, the court employed language which had -

j. heen developed | in a series of decisions as defining the .

1 applicability of the Sherman Act to intrastate activities.

‘It is familiar doctrine that in circumscribing the scope of:

the. Sherman Act with relation to intrastate activities,

4 the courts*have developed the criterion ‘that the indicted .

intrastate activities must affect interstate commerce. Hav- —

‘ing. held that thé respondent organization and the members

thereof were engaged in the operation of an agency of

interstate commerce, which alone was sufficient to establish :

_ jurisdiction of the Commission, the subsequent language

.of the edurt was unnecessary dictum which finds its ex-

planation in the existence of a cenegereny affecting inter-

state commerce. r es. -

The broad and unnecessary obiter dictum quoted in italics —

‘in the petitioner’s brief (page 8) must be considered in

- connection. with the particular instrumentality under in-

vestigation. This instrumentality was held to be ‘‘i

the current of interstate commerce’’. ‘The Chamber, while

i _intrastate in position and phffsical. immobility, was inter-.

‘state in purpose and operation. It was a turntable on an

x interstate track. If "the italicized ‘language ‘relied. upon

could be disassociated ‘from the other language of -the

opinion (not italicized) designating the Chamber as an in-

strumentality i in the current of interstate commerce,’ then,

not only would the opinion conflict with other opinions by

other-@ireyit Courts of Appéals, it would run counter, also,

. to the statute itself and with the-decisions of this ‘court.

Se SS ae

cote ‘i

It may be well at this point to observe a bit of practical, a

legal philosophy lorig ago announced by this’ court and

from which no departure has ever been suggested. Chief

Justice Marshall stated in Cohens v. niga, 6 Wheat.

— 264, 399, 5 L. Ed. 257, 290:

' “The. counsel for the defendant in error urge, in

opposition to this rule of construction, some dicta

the court, in the case of Marbury v. Madison. -

“It i is a maxim not to be disregarded, that general

ea expressions, in- every opinion, are to be taken in

connection with the case in which those expressions

are used. If they go beyond the case, they may be |

respected, but ought not to control the judgment $j inj

Pea -@ subsequent suit when the very point is presented

for decision. The reason of this maxim /s~obvious.

- _ The quéstion actually before the court is inves}igated

Vs with care and considered in its full éxten

principles whiclr may serve to Peonagheiane j

tele bearing on-all other cases is seiniian caplet ‘

investigated.’’ ay

To the same effect is Humphrey v. U. S.; 295 U. 8. 602, |

The cases cited. by. petitioner being essentially dissimilar. [

from the casé before the court below, there exists no

conflict -between the Circuit Courts of Appeals’ in the |

. application’ of the Federal Trade Commission Act to local j

sales méthods of the kind here in question. Intrastate |

transactions affecting interstate commerce have been held |

to come within the jurdiction of the Federal. Trade Com- —

mission only if the proceeding was based upon the Sherman.

. Act finding a. conspiracy or other concerted action with | |

_ the intent to restrain or monopolize interstate commerce.

a ~ In flat contradiction of the unsupported contention of :

15

petitioner, there is practical unanimity in the Cireuit Courts) - _¢

‘n the construction of this phase of the Federal Trade ;

Commission Act. The courts have consistently adhered

to the language of the statute and the pronouncements

of this court by rejecting the attempts of the Federal Trade

Commission to extend its jurisdiction to intrastate trans- —

actions on the mere ground that they affected interstate : '

, commence.

‘Tn California Riee Industry v. Federal Trade Piesisidtadaia

(C.C. A. 9th), 102 Fed, (2d) 716, the Commission attempted .

to prohibit the fixing of quotas of rice which the respond-

ents might mill or process. The court denied the asserted

jurisdiction over these: intrastate practices, saying, at page

723: ,

“". “Undoubtedly the fixing of itil quotas ‘affects’

‘the volume of rice -which after milling is sold and

delivered into interstate commerce, but unlike the Na-

tional. Labor Relations Act the Federal Trade Com-

‘mission Act does not create a control in the Commis-

‘sion of practices both ‘affecting’ interstate commerce

‘and ‘in’ interstate commerce. Since the Commission’s

y ‘.authority is confined to transactions, ‘in’ interstate

; commerce, paragraph ‘5’ of its order to cease and de-

J. Sist from ‘fixing or’ determining the quotas or per-

centages of the rice crop that the Miller respondents

“nfhy mill or process * * *’ is beyond i its jurisdiction

and void.’’ =

In Ward Baking Co. v. Federal Trade Commission (C. C.

“A. 2d), 264 Fed. 330, there was an attempted exercise of —

jurisdiction over the practice of giving premiums in the | .

sale of bread Within the.state of Rhode Island. Overruling

the prder of the Commission, the court said, at page 331:

{Doubtless bread sold in Massachusetts to be de-

livered to the purchaser in Rhode ‘Asland would be

Rp ee

_ Interstate commerce, but that is not this case. More. —

over, the Commission is- not finding the act of trans. ~

portation from Massachusetts to Rhode: Island unfair,

‘ but the method of local sales made in Rhode Island,

If the respondent had its own stores in Rhode Island,

and carried to them from Massachusetts bread to be

there sold, this method ‘of selling could not be consid. .

ered interstate commerce.’’ (Italics supplied.)

To the same effect see: Winslow v. Federal Trade Com-

mission (CO. C. A. 4th), 277 Fed. 206; Utah-Idaho Sugar Co,

v. Federal Trade Commission (CG. C. A. 8th), 22 Fed. 2nd.

122, 125; Canfield Oil Co. v. Federal Trade Commission (C,

_ (C. A. 6th), 274 Fed. 571, 574, 575; Federal Trade Commis.

sion v.. Claire Furnace Co. (C. C. Dist. of Col.), 285 Fed.

936, 941 (reversed in 274 U. S. 160 on the distinct ground

that the lower court improvidently granted an injunction,

plaintiff haying an adequate remedy at law).

III.

The decision below is wholly consistent with decisions con. |

struing other statutes regulating interstate commerce. f.

| Petitioner’s contention that the decision below conflicts

with cases involving other statutes regulating and pro-

tecting interstate commerce’ is without foundation. . Any

attempt to compare decisions arising under the Federal ~

‘Trade Commission Act with cases involving other federal

regulatory statutes must take into consideration the pur-

pose of the particular statute and the language by which

Congress defined: the field of regulation intended to be

covered by the statute. It will be seen that in many statutes

‘Congress deliberately employed language defining their

scope differently from the jurisdiction of the Federal

‘Trade Commission.

= 79

Any

Pe

- «

cn lictinabiscmaianiinitlt slniiani se >

Re

17

‘the Nhtional Labor. Relations Act (49 Stat. 449, 29

U..8. C. See. 151) empowers the National Labor cinerea

Board:

‘‘T'o prevent any person from engaging in any un-

fair labor practice affecting commerce.’’ (Italics sup-

- plied). (49 Stat. «a, Sec. C8); 29 U. S. C. Par.

160(a). )

‘The Act ‘ties provides :

“<The term ‘affecting commerce’ means in commerce,

or burdening or obstructing commerce,°or the free

- flow of commerce, or having led or tending to lead

to a labor, dispute burdening or obstructing commerce

or the free flow. of .commerce:’’(40-Stat. 450, Sec. -

2(7); 29 U.S. C. Par. 152 (7).)

‘The term ‘<commeree”? is defined as meanin . ‘trade ;

b

traffic, commerce, transportation or communication among

the several States’’, ete. A@ Stat. 450, Sec. 2(6) ; 29 U. 8. C.

Par. 152(6).)

Thus Congress expressly recognized the distinction be-

tween jurisdiction oyer practices ‘‘in commerce’? and prac-

tices.‘‘affecting commerce’’. In Apex Hosiery Co. v. Leader

(decided May 27, 1940, 84 L. Ed. 913 (Advance sheets) -

917), National Labor Relations Board v.. Fatnblatt, 306

U. §. 601, 607 -and National Labor Relations Board v.

Jones & Laughlin Steel Corporation, 301 U: S. 1, 31, this

court emphasized the broad jurisdiction conferred upon

the National Labor Relations Board by the phrase ‘a ffect-

ing commerce’’ as distinguished. from the: seope of er

federal ‘statutes. -To the same ‘effect ‘see:

Blankenship v. Kurfman (C. C. A. 7), 96 mee, |

(2d) 450, 456;

Leader v. Apex, Hosiery (C. GC. A. 3), 108 ‘Fred. .

(2d) 71, 81 (affirmed by this court in Apen aa

Hosiery v. Leader, May 27, 1940).

> a aa ae - a

ee nf

|

The Federal Employers’ Liability Act of 1908 (35 Stat 4

~ 65; 45 U.S. C. Sec. 51), provides that:

‘*Kvery common carrier by railroad while engaged

in commerce between any of the several States or.

territories * * * shaJl be liable in damages to any per. (

son suffering injury while he is. employed by such ;

carrier in such commerce a lap (See. 1; 46 U. 8. C

Par. *) .

4a

In rane the scope of this Act the phrase ‘em

ployed in interstate commerce’? has authoritatively been

held to mean that the injured employee, ft. the time of -

the injury, must be, actually ‘engaged i in interstate trans.

- portation, or in work’ so closely related to it as to be prac-

tically part of it. The employment in occupations which

ultimately affect the interstate movement of goods. was

held insufficient to invoke this Act.

aes See: Ss

Shanks v. Delaware L. & W. R. Co., 239 U. S. 556,

558. |

Erie R. Co. v. Welsh, 242 U. S. 303, 306. ’

Chicago & Eastern Illinois. R. Co. v. Industrial |

Commission, 284 U. S. 296, 299. |

_ By an enactment of the utmost significance in consider- . |

ing the intention of Congress when using the phrase ‘in

commerce’’ or ‘‘affecting commerce’’, Congress, in 193%,

amended the first section of the Employers’ Liability Act

by adding the following provision :

‘‘Any employee of a‘ carrier, any part of whose

duties as such.gmployee shall. be the furtherance of.

interstate or foreign commerce; or shall, in any way

; ne "os /

é . 2 ” t ri

ot | 7

directly or Just sand substantially, affect pan com-

merce as above set forth shall; for the purposes of

this Act, be considered as being employed by such

~ earrier in such commerce and shall be’ considered as —

entitled to-the benefits of this Act and of an-Act en-

titled ‘An Act relating to the liability ‘of common

+, " ear iers by ‘railroad to their employees in certain

cases’ (approved April 22, 1908), as the same has

| been or ‘may. hereafter be amended.’’ (53 Stat. 1404.)

_ Considering that the term, ‘‘employed in interstate com-

/ merce”, n@ded enlargement, Congress thus provided for

_ the inclusion in the statute of occupations affecting com-.

merce by expressly extending the application of the Act

to employees -whose duties ‘‘shall, in any way directly

or closely and substantially, affect such commerce.’’

The Fair Labor Standards Act (52 Stat. 1060; 29 U. S..

C. Sees. 205, 207) governs every employee ‘‘who is en-_

gaged in commerce or in the production of goods for

commerce’’. The phrase ‘engaged: in commerce’’ has

been held not to cover: occupations affecting interstate

commerce. See U. S. v. F. W. Darby Lumber ies D. C.

S. D. Ga.), 32 Fed. Sup. 734, 737.. ° .

The Interstate Commerce Act (41 Stat. 474; 49 U. S. C.

Sec. 1) applies generally ‘‘to common carriers engaged

in—(a) the transportation of passengers or property

wholly by railroad, or partly by: railroad and partly by

water when both are carried under a common control,

management, or arrangement for a continuous carriage

or shipment; * * *”’ (Sec. 1 (1a), 49 U.S. C. Par. 1 (la)).

Viewing commop carriers as ‘essential agencies for the

movement of interstate commerce, Congress thus subjected,

@ priori, all common carriers to. the jurisdiction of the -

| interstate Commerce Commission. |

Section 2 provides for the. application of the Interstate

Commerce Act to the transportation of passengers and

property and transmission of intelligence. In a Proviso

to* this section an exception is made with respect ‘‘to the

- transportation of passengers or ‘property, or to the re.

ceiving, delivery, storage or handling of property, wholly

within one state and not shipped to or from any foreign

country from. or to any place in thé United States as

aforesaid; * * *.’’ The effect of this proviso is to exempt

transportation which is established to be wholly within

_one state from the scope of the Act which, a priori, vests

the Interstate Commerce Commisston with jurisdiction

" over all ‘transportation of passengers and property.

Thus in the broad language of the Interstate Commerce

Act is found express legislative sanction for the establish:

_ ment and regulation of intrastate rates, unless such rates

| concern charges for transportation wholly intrastate, hav-

ing no contact or connection with, or influence upon, the

‘dominant interstate character of the common carrier.

\ In the Shreveport Rate Case (Houston ¢ Texas Rail-

a way Co. v. United States), 234 U.S. 342, which is relied

- upon by petitioner as inconsistent with the construction

\ of the Federal Trade Commission Act by the court below

'F (petition p.°9), the Interstate Commerce Commission, in

i a proceeding against the Houston, East & West Texas

” Railway Company and the Houston and. Shreveport Rail-

road Company, found that the carriers maintained unrea-

sonable rates in their interstate transportation from

Shreveport, Louisiana, to various points in Texas. The

- Commerce Commission consequently established the maxi-

/ mum class rates for: this interstate traffic. These inter-

"+ \ gtate rates“from Shreveport to certain points in Texas

were higher than rates charged by the‘carriers from cities

‘in: Texas to such points under substantially similar con-

*.

?.

yy)

/

.

= effected against Shreveport. ool dese

*" ditions and circumstances: The Interstate Commerce

Commission found: : dag ha oleh aye

‘“‘That thereby ‘an unlawful and “undue preference

-and advantage’ was given to the Texas cities, and a’:

‘discrimination’ that was ‘undue and unlawful’ was

»/

The es of the Commission, therefore, first fixed and

established the maximum Class rates to apply to the inter-

_ state transportation of traffic from Shreveport, Louisiana,

to named points in Texas. In connection with, and in-

cidental to, this regulation of the interstate rates of the

carriers, the, order of the Commission ronnie the car-*

riers : pout | /

“to desist from’ charging’ higher rates for the trans-

portation of any commodity from. Shreveport. to Dal-

las and.Houston, resp tively, and intermediate points

than were paar neously charged by the car-

riage of such commodity from Dallas and Houston

* toward Shreveport for equal distances,.as the -Com-

mission found that relation of rates to be reasonable.’”

It-is to be noted that the interstate as well as the intra-

‘state traffic regulated by this order of the Commission

was carried on with the same trains serving interstate

as well as intrastate transportation,\on ‘the same tracks

leading from points outside of Texas to cities in Texas

and serving also as connections between those cities with-

in the State of Texas ‘which were mentioned i in the order.

This background of the order in question is illuminated

by the following passages from the opinion of the court:

“While these . decisions -sustaining ‘the Federal

power relate to measures adopted in the interest of

the safety of persons and propérty, they illustrate

_

: ° .

; ‘ :

2 si

- 0

. . ‘ ,

the. siesta, that Congress, in the exercise of it :

paramount power, may prevent the common instry.

mentalities. of interstate and . intrastate commercigl

intercourse from being used in their intrastate opera.

tions to the injury of interstate commerce.. This jg

mot to say that’ Congress possesses the. authority to

regulate the internal commerce of a state, as such,

but that it does possess the power to foster and pro.

tect interstate commerce, and to take all measures

necessary: or. appropriate. to that end, although intra.

state transactions of interstate carriers may thereby

be controlled. .

“This principle is silane here. We re no

reason to doubt that Congress i is entitled to keep the

highways of interstate communication open to inter. °

'. state traffic upon fair and equal terms. That an unjust

discrimination in the rates of a common carrier, by

which one person or locality is unduly favored as

- against another under substantially similar conditions

of traffic, constitutes an evil, is undeniable; and where

this evil consists in the action of an mterstate carrier

in unreasonably discriminating against interstate traf-

fic over its line, the authority of Congress to prevent

- - it is equally clear. It is immaterial, so far as the

protecting power of Congress is concerned, that the

. discrimination arises from intrastate rates as com-

- pared with interstate rates. The use of the instru

ment of interstate commerce in a discriminatory mat-

ner so as to inflict injury upon that commerce, or

some part thereof, furnishes abundant ground for

rs Federal intervention. ”” (p. 353, 354) ( Italics supplied.) .

‘Having -decided that the regulation of. these intrastate

rates was a necessary part of the regulation of the inter-

23

state rates and that such regulation came~ within the

power which Congress had constitutionally vested in the —

Interstate Commerce Commission by Section 3 of the

B Act (24 Stat. 380), the court proceeded: to consider the

"effect of the proviso to Section (2) of the Act provid-

ing that the Act shall not. apply to the transportation of

passengers or ‘property wholly within one state. The

Commerce Court had held: :

«That this proviso’ is.a mere disclaimer of any —

intention on the part of Congress, in enacting the.”

Act to regulate commerce, to exceed its constitutional

power and that it was not designed to limit or confine

~the power which Congress could exercise—and, in.

our opinion, has exercised—in respect of such settlers

- -as are here in: dispute. If this construction be cor-

rect, it follows that the proviso in no way prevents

,the application of the third section to the facts of

this case, and, therefore, it was within the authority

of the Coniailssion to make the order im question.” —

(205 Fed. 380, 384) oe

This Court, in affirmigg the decision of the Commerce

Court, held that the carriers, being instrumentalities of

intrastate comnierce, were subject to the jurisdiction of

‘the Commission and that their intrastate rates in ques-

tion, giving undue preference to certain localities, came

‘within the language of the third section of the Act. It -

said: = * 3

“This language is certainly sweeping panary! to em-

brace all the discriminations of the sort described

which it was within the power of Congress to condemn. ~

' There is no exception or qualification: with respect.

to an unreasonable discrimination against interstate

traffic produced by the relation’ of intrastate to inter- _

state ‘rates as maintained by the carrier.”” (P. 356) *

Since the proviso to the first section of the Act constitutes

- an exception to the power generally conferred upon the

Commission by the third Section of the A’ct, the court gave

. to ita strict construction as not derogating from the gen-

eral powers of- the ‘Commission unless it should be shown

to be applicable in letter as well as spirit.

‘‘These words of the proviso have appropriate ref.

erence to exclusively intrastate traffic, separately con.

sidered; to the regulation of domestic commerce, ag

_ such. The powers conferred by the act are not thereby

limited where interstate commerce itself is involved.

This is plainly the casé when the Commission finds

that unjust discrimination against interstate trade

arises from the relation of intrastate -to interstate

rates as maintained by a’ carrier subject, to the act.”

i 366) 3

wae

In view of tliis reasoning of the court, ‘the assertion

of petitioner that the considerations and the rule laid down.

_> In the Shreveport case apply, a fortiori, to. the instant

- ease (petition p. 10). is, therefore, wholly unwarranted.

Contrary to the Interstate Commerce Act, the Federal

‘Trade Commission Act confers but a limited jurisdiction

upon the Trade Commission. In construing the Trade

Commission Act the court is required. to consider not the

‘effect of an exception to.a general power vested in the

‘ Commission, but the meaning of that part of the statute

which constitutes the grant of authority.

A railroad operating interstate occupies a significant

and important position in the national economy. It is

obliged to serve, at prescribed rates, anyone lawfully re-

questing its facilities.. The basic structure of such in-

: -stitutions, both physically and financially, is determined

by the interstate. character of its, business. Its rails or

Na oa “

(

>

lines run continuously across state borders. Its stations

, house under one roof all of the employees and’ parapher-

nalia necessary to handle both interstate and intrastate

transportation. The same freight depote receive, load and .

unload goods moving interstate and goods moving in in-.

trastaté journeys. Its*round houses an@- switching. equip-

. ment are similarly used and its rolling moves across

- state lines with through passengers and freight and with

j /fassengers and freight of local destination. Its bonds

and debentures are sold upon the basis of its-total earnings.

When, therefore, the Interstate Commerce Commission

comes to determine railroad rates, it must consider the

carrier as a-whole, its cost of operation, its earnings and its

obligations. Hence sgmne measure of control of local rates

is inescapably necégsary. Considerations of the same im-

port apply, essentially, to steamship lines, telegraph and

telephone companids and other media: of transportation é

and transmission.

The attempt to regulate intrastate sdles of penny bars ©

of -candy. under a sta tite granting power to Consider only .

acts.and praetices.in interstate commerce-are hardly com: |

parable to ‘the regulation of rates of national common

carriers under an empowering statute of the-breadth-and

scope ‘of the Interstate Coffimerce Act.

The Clayton Act (38 Stat. 730; 15 U. 8. 0. Sec. 13) pro-

vides that:

r

commerce, in the course of such commerce, either

directly or indirectly, to discriminate in price between

different purchases of commodities of like grade and

quality where either or any of the purchases involved

in such discrimination are in commerce, * * * and where

‘the effect of such discrimination mfy be to substantially.

s

“It shall- be, unlawful. for any. person “elena in

=

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8 ©

26

a

. ¥ ba

lessen competition or fond to create a moriopoly i in

any line of commerce * * *”? =

It has consistently been held that in order to come

within the ambit of this statute the person charged with

violation thereof must have committed a discriminatory aet

in the course of interstate commerce. Allegations that the

activities conipla@ined of affect interstate commerce are

not sufficient. See:

Inpson v. Socony-Vacuum Corp. (C. C. A. 1), %

Fed. (2d) 213,.216, 217.

Port & Co.:v. Girdler, (N. Y. Supreme Conk.

November, 1939), CCH ‘Trade Regulations No.

25, 347. : a :

American Can Co. v. Ladoga Canning Co. (C. C. A. 7),

44° Fed. (2d) 763, is alleged by petitioner to. apply the

: Clayton Act on the ground that defendant ’s intrastate

sales affected interstate commerce. In passing, it may be

remarked that the opinion in that case was written by

the same judge who rendered, the opinion of the court

below. construing the language of the Trade Commission

Act as not covering intrastate activities affecting inter-

state commerce. In the American Can Co. case it was

_ found that the defendant company discriminated . in its

sales to purchasers . inside the: state as well as’ outside

the state. The greater part of its product was sold to the

VanCamp Company which maintained a factory in the same

state in which defendant ’s plant was located. The Van-

Camp Company used the cans purchased from the defend-

ant for food packing and in turn sold its product packed in

said. cans in interstate commerce, throughout the United

States. The sales by the defendant which were alleged

to be discriminatory thus initiated the interstate journey

of defendant ’s product which was Read temporarily inter-

0 27

rupted by the process of filling the cans in Van. Camp’s

plant’ and from there continued its interstate movement. ©

The court’s conception of the sale- of the cans by the

defendant as a part of ‘an intended and continuous current

of interstate commerce is expressed beyond doubt in the

following part of its opinion: |

“he tin cans were useless save ‘as they might be

used as containers for food stuffs. Both parties knew

they were to be so used, They were sold with the

understanding that the purchaser would use them to

distribute goods in interstate commerce.’’ (P. 771)

’

Moreoyer,in deciding that these sales by defertdant were

‘in the course of interstate commerce’’, the court fol-

lowed explicitly the stream of commerce doctrine laid

down in Stafford v. Wallace, 258 U. S. 459, and Swift v.

United States, 196 U. S...375, and treated the packing

industry of Van Camp as a channel or throat of commerce

analogous to the stock yards. The American Can case, - - -

therefore, affords no basis for petitioner’s contention that

defendant’s intrastate, sales were held to constitute sales

in the course of interstate commerce ‘because of their effect

upon such commerce. |

In fundamental opposition to the‘facts of the American

Can Co. case, the goods. sold by respondent in the instant

case are sold, as well as consumed, in the state of, their

origin. Their movement does at no time becdme a part

of the stream of interstate commerce. Thi ibn

begins and ends within the boundaries of .a sin tate,

The decision of the American Can Co. case is, therefore, |

wholly inapplicable to the instant case.

As the last phase of its’ argument, petitioner suggests

that the Federal Trade ‘Commission Act was passed in

order to supplemez.t the Sherman Act and that the Trade

PNA 2AM MATTE MSI

/

28

Commission Act could not be construed to be narroy

in scope than the statute which it was designed to supp

ment. There is, of course,-no dispute about the fact th

the Trade Commission Act was intended to supplem

the Sherman Act and that the Trade Commission is e

powered to enforce the Sherman Act. The Sherman A

however, possesses a definite objective which is stated

unmistakable terms in‘the language of the Act itself, 8

. tion 1 of which provides:

‘‘Eyvery contract, combination in the form of tr

or otherwise, or conspiracy, in restraint of trade

commerce among ‘the several states, or with forei

nations, is declared to be illegal.’’ (26 Stat. 209 ;

U. 8. C. Par. 1)

Section 2 of the a Act provic des:

“Every person who shall monopolize, or attem

to monopolize, or combine or conspire with any oth

person or persons to monopolize any part of the tra

or commerce among the several states, or with forei:

nations, shall be deemed guilty of a misdemean

** * (26 Stat. 209; 15 U. S. C. Par. 2)

The language of the fereneiig provisions discloses th

Congress was striking at contracts, combinations and cd

spiracies in restraint of trade or commerce and at m

nopolies, actual or attempted or contemplated -by a co

bination or conspiracy. Section 1, therefore, in effe

makes unlawful conspiracies in restraint of commerce, al

Section 2 declares to be illegal the monopolization ‘or cc

Spiracy or attempt to monopolize trade or commerce. |

_both sections the trade or commerce referred to is t¢

trade or commerce ““among a several states or wi

foreign nations’’.

_

, an

29

Two distinct. prerequisites have been evolved for the

application: of the Act: (1) There must be a combina-

| tion, conspiracy or other ‘concerted action to restrain com-

merce, or an actual’ monopoly or attempt to monopolize

a business or industry; (2) The challenged activities must

be aimed at interstate commerce and where these activities

take place wholly within one state there must be an in-

tention to restrain interstate | commerce.

| In the following group of cases, dematiiiais by the Fed-

eral Trade Commission were dismissed on the distinct

ground that the evidence did not show a combination or ~

S other concerted action or a monopoly or an unlawful. dis-

‘erimination by the defendants:

-. Federal Frade ‘Commission v. Sinclair Refining’

Co., 261 U. S. 464, 473..

Federal’ Trade Cammission v. Curtis Publishing

Co., 260 —. S. 568, 581.

- Federal Trade Commiteston Vv. Gratz, 253 U. S. 421,

«498.

B. S. Pearsall Butter Co. v. Federal Trade Com-

mission (C. C. A. 7), 292 Fed. 720, 722.

, Federal Trade Commission v. Paramount Famous-.

Lasky Corp: (C. C. A. 2), 57 Fed. (2d) 152, 157.

. American Tobacco Co. v. Federal Trade Commis-.

' ston, 9 Fed. (2d) 570; 582.

Tn the feliintoas line of cases, actions under the Sher-_

man. Act were dismissed by reason of the fact that the .

intrastate. activities on whieh the charges were based had ,

primarily a local object and were not, intended to restrain

or monopolize interstate commerce : . a

Apex Hosiery Co: v. Leader, wees U. Se :..... (De:

cided May 27, 1940,. 84 L. Kd. Advaneé Sheets

913). a ;

30

Levering ¢ Carrigues Co. v. Morrin 289 Uv & :

- 103, 107.

Moore v. New York Cotton Exchange, et al., 270 |

_U. 8. 593. ~ ) a

7 se ni Association of San Francisco v. ‘United

| tes, 268 U. S. 64, 80.

United Leather Workers” v. Herkert, 265 U. §.

457, 471.

~ Blumenstock Bros. v. Curtis rene Co., 252 "

U. 8. 486, 442.

-C. E. Stevens Co. v. Foster y, Kleiser Co. (CC. |

_ A. 9), 109 Fed. (2d) 764. :

. Foster é Kleiser Co. v. Special Site Sign'C Co. (C |

. ©. A. 9), 85 Fed::(2d) 742.

Ewing-Von Almen Dairy Co. v. C. @ C. Ice Cream.

Co., (C. C. A. 6), 109 Fed. (2d) 898.

Blankenship v. Kurfman (C. C. A. 7), 96 ~~

(2d) 450.

—Abouaf'v. Spreckels Co. (D. C. Cal. ), 26 Fed: ries

"830, 833.

United States v. Great Western Sugar Co. (0.

C. Neb.), 39 Fed. (2d) 149, 151.

Umted States v. Southern California Wholesale

Grocers Assn. (D. C. Cal. )s 7 Fed. (2d) 94,

947.

Andrew Siiueies Co. v. Woodbury (D. C. Deli),

271 Fed. 43.

In the case at aa admittedly, there is no evidence and

consequently ‘no finding that the respondent was guilty

of either.of the ‘two prerequisite factors of liability, both .

of which are necessary to sustain a charge.under the Sher-

- man Act. Respondent did not participate in a conspiracy

cp;

31

“a “other concerted action, nor did it attempt to monopolize/

the business in which it was engaged. Respondent, more

over, had no intention of restraining interstate commerce, —

the sole object of its criticised practices being the sale of

its goods within the State of Illinois. In the absence of

these two essential elements of the Sherman Act the Com-

mission has no jurisdiction over intrastate methods of

competition. as |

CONCLUSION.

een el

,

_- The Circuit Court of “Appeals recognized the injunctive

_ order of the Commission entered as the result of its own

application and prosecution, as being a bid for authority

_ to transgress the limitations of the statute. which created -

it and, following the language of that Act and the bind-

ing decisions by this court, left the matter where it belongs,

—with the Congress. Before that body, if the subject

be ‘regarded’.as of the commanding public importance .

claimed for it, an amendment may be enacted conferring

such increased authority upon the Commission as the

law-making department of the nation deems necessary.

_ Because the question presented by the petition has been

authoritatively answered by both legislature and judiciary,

it is-urged that the petition for certiorari to the Circuit .

Court of i cadiaias of the Seventh Cireuit be denied.

Respectfully submitted, EN,

\

THEODORE E. hats,

Samvue. G. CLawson,

. . Attorneys for Respondent. |