# Respondents Answer and Brief in Support — Federal Trade Commission v. Bunte Bros. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386401_0363%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Respondents Answer and Brief in Support - **Published:** January 1, 1941 - **Citation:** 312 U.S. 349 ## Text BLANK PAGE "> ‘FILECOPY =. | mime , : CHAR GS ELM OSE Cavey —————————— nee ERK | . ages eed ~ 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. ‘ 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. — ; ~ py * - bee Liaw ARGUMENT AGAINST GRANTING THE WRIT. ; y 4 ea a oe 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 — - 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 : “ 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 = Tae csiata alah, \ Ye hasten ches dena ; * he A LID SLA R OPA BBS OE TN 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. | --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386401_0363%3A4. Public record. Not legal advice.