Petitioners Brief — Cheff v. Schnackenberg

INDEX

5 Page

Me Opinion Below ............0ceccsceceacecesceseeees 1

IN i. Bib oa ld. Give cd-enenis veonainnds denier 1

ie Question Presented ..............ccccccccccesescees 2

' (Constitutional Provisions ..............ececeeeeeees 2

Statutes and Rules Involved ..................0ee ees 2

EE bb 0a 268 ins C5000 os Venencesiges baveenees 3

eompammary of Argument ........cccccccccccccccccecs 6

OE cc dub na sand ihe ed ecdoedeeseaedenns 6

I. The Intent of the Framers of the United States

Constitution Was Not to Exempt Criminal Con-

tempt from the Provisions of Article III and

IS TEE sv 0 + 5.0.0. 6:0 dcccnne Chaba vidvateds 6

II. The Sentence of Six Months Imprisonment Is Not

Constitutionally Permissible Because Contempt

Powers in Administrative Law Cases are Civil,

te REE o's no chnepses eked tage pene eenKe 11

III, The Imposition of the Sentence of Imprisonment

for Six Months After Denial of a Jury Trial

Violates Article III and the Sixth Amendment .. 15

I: v-0's w-'ev'ee'e nines INURUVEL O00 ddeveve cows’ 23

CITATIONS

Ballantyne v. United States, 237 F’. 2d 657, 667 ...... 16

Bigelow v. RKO Radio Pictures, 78 F. Supp. 250 ...... 16

Cammer v. United States, 300 U.S. 399 ............-. 19

’

F.T.C. v. A. McLean & Son, 94 F. 2d 802 ............ 13

Gompers v. Buck Stove and Range Company, 221 U.S.

SRE MEMES 066's bivueh stance en adds sisese.gs és

Green v. United States, 356 U.S. 165 ............05 11, 15

Holland Furnace Company v. F.T.C., 295 F. 2d 302... 17

ii Index Continued

Page

In Re Floersheim, 316 F. 2d 423 ..........-.eeeeeeee 18

In Re Thomas BE. McConnell, 370 U.S. 230 ............ 16

Michaelsoa v. United States, 266 U.S. 42, 66 (1924) .. 15

a v. Hopwood Retinning Company, 104 F. 2d

s Sic wink CWE SAMOA L eae anes Cee bee esas 13

N.L.B.B. v. Mastro Plastics Corp., 261 F. 2d 147 .... 12

United States v. Barnett, 376 U.S. 681 ............ 11, 21

United States v. Harris, 347 U.S. 612, 617 .......... 17

United States v. United Mine Workers of America, 330

os ee rey Pare Pere eee 16

Constitution, STATUTES AND RULEs:

Constitution of the United States:

Article TIL, Section % .. 5 ccc cwccsccccess 2, 6, 7, 11, 21, 22

Sixth Amendment ........ aout eevnv cree 2, 6, 7, 11,

19, 20, 21, 22

TE UE CED og onic kde cen tesnesvededenyavess 22

16 URE: GO AD) uv cece cc ccwesctnd Cevececdscnesees 15, 21

ee 8, Se ee ree yer eer Cre ee |

Wea A, Oe , b c bawiien ava paddecsedeceuss 12

“ena: Tne Bio ae ee in oe Sek ctievcnwesses ll

National Labor Relations Act ...........+.s.eeeeee: 12 :

ee ee ee ear Perry re Te cree ny

Packers and Stockyards Act ...........:eeeeeceeeees 12

Rule 23(c), Federal Rules of Criminal Procedure .... lif

TREATISES:

Brant, Irving, James Madison, Father of the Constitu-

ON ON ik Coke crn ae chads seers eesieen teh:

Ferrand, Max, Edmund Randolph, The Records of the

Federal Convention of 1787 ............0eeeeee:

Ferrand, Max, Elbridge Gerry, The Records of the [|

Federal Convention of 1787 ............eeeeees oF

Hamilton, Alexander, The Federalist, Trial by Jury,

TEE, GOP oss ci cntevceeeccina sd deesneceueven 9, 10

—

Index Continued iii

Page

Magna Carta, Clauses 39 and 40 ................200. 6,7

Tefft, United States v. Barnett: ‘‘°>Twas A Famous

Victory,’’ The Supreme Court Review (1964), 123 22

Works of John Adams, Vol. 10, pp. 236, 240 .......... 8

MISCELLANEOUS:

CCH Trade Reg. (Vol. 5, Rep. paras. 9701.40 and 9703)

eg PRET i ne

IN THE

Supreme Court of the United States

OctToBER TERM, 1965

No. 67

Paut THEODORE CHEFF, Petitioner,

Vv.

ELMER J. SCHNACKENBERG, Er Ax.

On Writ of Certiorari to the United States Court of Appeals

for the Seventh Circuit

BRIEF FOR PETITIONER

OPINION BELOW

The opinion of the Court of Appeals (R. 15-24) is

reported at 341 F. 2d 548.

JURISDICTION

The judgment of the Court of Appeals was entered

January 27, 1965 (R. 25-28). The petition for a writ

of certiorari was filed on April 8, 1965, and certiorari

was granted on November 15, 1965. The jurisdiction

of this Court rests upon 28 U.S.C. See. 1254(1).

2

QUESTION PRESENTED

Whether, after denial of a demand for jury trial, the

sentence of imprisonment of six months imposed upon

petitioner is constitutionally permissible under Article

III and the Sixth Amendment.

CONSTITUTIONAL PROVISIONS

The provisions of the United States Constitution

involved are Article III and the Sixth Amendment.

Article III, Sec. 2, par. 3, provided in pertinent part:

“The Trial of all Crimes, except in Cases of

Impeachment, shall be by Jury; and such Trial

shall be held in the State where the said Crimes

shall have been committed ....”

The Sixth Amendment provides in pertinent part:

‘Tn all criminal prosecutions, the accused shall

enjoy the right to a speedy and public trial, by an

impartial jury of the State and district wherein

the crime shall have been committed... .”’

STATEMENT

In this case, Petitioner was found guilty of crimi-

nal contempt and sentenced to imprisonment for a

period of six months by the Court of Appeals for the

Secenth Cireuit for willfully causing violations of a

pendente lite order of that Court enforcing a cease

and desist order of the Federal Trade Commission. (R.

25) ~

On July 7, 1958, in an administrative proceeding

entitled ‘‘In the Matter of Holland Furnace Company,

a corporation, Docket No. 6203,’ the FTC entered an

order commanding said corporation ‘‘and its officers,

agents, representatives, and employees,”’ in connec-

tion with the sale of furnaces and heating equipment

ag

Pan Dine ae OP

PETE Qe WTSI ae

BML I SR EOE

3

in commerce, to cease and desist from eight specified

practices found to constitute unfair methods of com-

petition under the Federal Trade Commission Act.

(R. 1)

Thereafter, in the course of a proceeding initiated

by the Holland Furnace Company (hereinafter some-

times called Holland) to review the FTC cease and

desist order, the Court of Apepals for the Seventh

Circuit, on application of the FTC, entered a pendente

lite order on August 5, 1959, commanding the Holland

Furnace Company to comply with the cease and desist

order ‘‘until and unless said order .. . be set aside...

or until further order of . . .(the) Court’? (R. 3&4).

Petitioner was not a party to the FTC proceedings or

to the review proceedings in the Court of Appeals,

nor was he named in the Court’s pendente lite enforce-

ment order. Both the FTC cease and desist order and

the Court’s order enforcing the same were limited to

prohibiting eight deceptive sales practices, and neither

contained any provision specifying what steps or af-

firmative actions were required to be taken by the com-

pany of its executives to prevent violations. (R. 3&4)

On Petition of the FTO, the Court of Appeals, on

April 26, 1963, issued a rule to show cause against Pe-

titioner (who, during the relevant period, had beeu

a director, president and chief executive officer of

Holland) and against six other directors and four

other Holland executives; each of these persons was

required to show cause why he should not be held in

criminal contempt

“‘by reason of having knowingly, wilfully and in-

tentionally caused, and aided and abetted in caus-

ing, respondent Holland Furnace Company to vio-

—

4

late and disobey, and fail and refuse to com-

ply with . . . (the pendente lite order of the

Court) entered on August 5, 1959....”” (R. 4&5)

Also on April 26, 1963, an order was entered appoint-

ing counsel for the FTC as attorneys to prosecute

the proceeding on behalf of the Court (R. 6&7).

Petitioner filed a verified answer to the rule to show

cause denying that he had knowingly, wilfully or in-

tentionally caused and aided and abetted in causing

Holland Furnace Company to violate and fail and re-

fuse to comply with the Court’s order of August 5,

1959 (R. 10).

On October 9, 1963, the Court of Appeals ordered

the Petitioner to file on or before November 8, 1963,

, an election of trial by jury or a waiver of a jury trial

(R. 11).

In accordance with the order of the Court, the Peti-

tioner elected a trial by Jury (R. 11&12).

On May 27, 1964, the Court of Appeals denied the

election of a trial by jury made in accordance with its

order of October 9, 1963 (R. 14).

The proceeding was tried by the Court of Appeals,

which heard evidence. On January 27, 1965, the Court

rendered an opinion (R. 15) and entered a judgment

order (R. 25): finding that Petitioner ‘“‘knowingly,

wilfully and intentionally caused, and aided and

abetted in causing, in one or more instances, viola-

tions by Holland Furnace Company of each of the

eight prohibitions in the August 5, 1959, order of this

court.”’

PO NR 8S BOTS

5

In this order of the Court, the eight prohibitions

were:

(1) Representing, directly or indirectly that any

of its employees are inspectors or are employees or

representatives of government agencies or of gas or

utility companies.

(2) Representing, contrary to fact, that its salesmen

or servicemen are heating engineers.

(3) Representing that any furnace manufactured

by a competitor is defective or not repairable, or that

the continued use of such furnace will result in as-

phyxiation, carbon monoxide poisoning, fires, or other

damage, or that the manufacturer of such furnace

is out of business, or that parts of such furnace are

unobtainable, unless such are the facts.

(4) Tearing down or dismantling any furnace with-

out the permission of the owner.

(5) Representing that a furnace which has been dis-

mantled cannot be reassembled and used without dan-

ger of asphyxiation, gas poisoning, fires, or other dam-

age, or for any other reason, when such is not a fact.

(6) Requiring the owner of any furnace which has

been dismantied by respondent’s employees to sign

a release absolving the respondent of liability for its

employees’ negligence, or of any other liability, before

reassembling said furnace.

(7) Refusing to immediately reassemble, at the re-

quest of the owner, any furnace which has been dis-

- mantled by respondent’s employees.

(8) Misrepresenting in any manner the condition of

any furnace which has been dismantled by respond-

ent’s employees.

—

6

SUMMARY

1. Criminal contempt is included in the provisions

of Article III and Amendment 6 of the United States

Constitution.

9. The sentence of six months’ imprisonment is not

constitutionally permissible because contempt powe:s

in administrative law cases are civil, not criminal.

3. Petitioner was entitled to a jury trial under the

provisions of Article III, Sec. 2 of the Constitution

and the Sixth Amendment before he could be sen-

tenced to a term of six months’ imprisonment. The

severity of the sentence, imprisonment for six months,

imports a crime which is not punishable except in

accordance with the dictates of the Constitution.

ARGUMENT

The Intent of the Framers of the United States Constitution

Was Not to Exempt Criminal Contempt from the Provi-

sions of Article III and Amendment 6

Seven hundred fifty years ago, the barons of the

English realm wrested from the despotic King John

certain fundamental rights which no sovereign could

override. These rights were set forth in the great

compact known as Magna Carta. The most important

part of that document is the famous 39th Clause of

the Magna Carta: ‘‘No free man shall be taken, im-

prisoned, disseised, outlawed, banished or in any way

destroyed, nor will we proceed against or prosecute

him, except by the lawful judgment of his peers and

by the law of the land.’’

In addition to Clause 39, the Magna Carta contains

Clause 40 that provides for a speedy trial: ‘‘To no

one will we sell, deny, or delay right or justice.’

_ a

7

Here is the kernel of the American judicial ideal of

equal justice under law for every man. Whatever

the barons and bishops who forced King John to sign

the Charter may have intended, Magna Carta now

stands for many of the cherished rights of free men.

Foremost among these rights is trial by jury.

One hundred ninety years ago, the delegates to the

United States Constitutional Convention met with

nothing else in view but to provide for posterity

against the wanton exercise of power which could not

otherwise be done than by the formation of a funda-

mental constitution. In order to further that purpose,

they wrote into the Constitution of the United States

two clauses guaranteeing the right to trial by jury.

Article IIT provided that the trial of all crimes except

in cases of impeachment shall be by jury, similar to the

39th Clause of the Magna Carta. The Sixth Amend-

ment provided that in all criminal prosecutions the

accused shall enjoy the right to a speedy and public

trial by an impartial jury, similar to the 40th Clause

of the Magna Carta.

that in colonial days the courts had exercised the

power to try criminal contempts with a vengeaner,

but without a jury. They sentenced people to be

whipped, humiliated in stocks and even nailed by the

ear to a pillory. The framers of the Constitution

resented the inhumane treatment parcelled out by

these courts.

J The framers of the Constitution were well aware

These courts were operating under a colonial gov-

ernor who owed his power to His Majesty King

George III. Their writs and orders were issued under

ie

8

the authority of King George ITI, and indeed these

papers included the particular year of the King.*

In Massachusetts, so great was the resentmout of

the colonists against these courts that the House of

Representatives voted to impeach the judges. This

came about because His Majesty King George III

commanded that the judges should receive salaries

from the King. The vote of impeachment was, of

course, rejected by the Governor, but it remained

on the journals of the House and was printed in the

newspapers and went abroad into the world. The

result was that Grand and Petit Jurors refused to

take their oath because, in their minds, the courts

stood impeached by the representatives of the people

for high crimes and misdemeanors. Works of John

Adams, Vol. 10, pp. 236-240. Letter to William Tudor.

In Massachusetts, as probably in the rest of the

colonies, the judges were Royalists loyal to the mother

country. At the outbreak of the Revolution, they fled

the colonies or retired into seclusion

The framers of the Constitution, on the other hand,

were men who had risked their lives and property and

their sacred honor to provide for themselves and pos-

terity against the wanton exercise of power. They

most certainly did not intend to put the stamp of

their approval on the criminal contempt power of these

*In April, 1776, a resolve was passed to alter the style of writs

and other legal processes and substitute for George IIT in these

papers the name of ‘‘The People and Government of Massachu-

setts,’’ and in dating all official papers to omit the particular year

of the king and give only the year of our Lord. Proceedings of

the Second Provincial Congress, printed edition of 1838, pp. 262,

263, under date of May 27, 1775.

_ pn eens

9

judges, but they did intend to guard against the op-

pressions of future magistrates by doubly guarantee-

ing trial by jury.

Because the deliberations of the framers of the

United States Constitution were private and behind

closed doors, it is difficult to obtain any great number

of direct quotes from the delegates. However, we

have a few bearing upon the right to trial by jury.

Elbridge Gerry, delegate from Massachusetts to the

Constitutional Convention, urged the necessity of juries

to guard against corrupt judges. Farrand, Max, The

Records of the Federal Convention of 1787, New

Haven, Yale University Press, 1911, Vol. ITI, p. 587.

If one of the reasons for granting trial by jury in two

instances was to guard against corrupt judges, then

of course there could be no exemption from either

Article III or Amendment 6 in criminal contempts.

Edmund Randolph, in the Virginia Convention, June

6, 1788, Farrand, Max, The Records of the Federal

Convention of 1787, Vol. III, p. 309, reported, ‘‘The

trial by jury in criminal cases is secured—in civil cases

it is not so expressly secured as I could wish it.’? The

conclusion is inevitable that he meant that in all crim-

inal eases, as we understand the meaning of criminal

cases, the right to a trial by jury is secured by the

Constitution.

Alexander Hamilton, in his report To the People

of the State of New York, had this to say about what

the Constitutional Convention intended with relation

to trial by jury:

‘“‘The friends and adversaries of the plan of

the convention, if they agree in nothing else, con-

cur at least in the value they set upon the trial

a

10

by jury: Or if there is any difference between

them, it consists in this; The former regard it as

a valuable safeguard to liberty, the latter repre-

sent it as the very palladium of free government.

For my own part, the more the operation of the

institution has fallen under my observation, the

more reason I have discovered for holding it in

high estimation; and it would be altogether super-

fluous to examine to what extent it deserves to be

esteemed useful or essential in a representative

republic, or how much more merit it may be en-

titled to as a defense against the oppressions of

an hereditary monarch, than as a barrier to the

tyranny of popular magistrates in a popular gov-

ernment.” Hamilton, Alexander, The Federalist,

Trial By Jury, ‘“To the People of the State of

New York,’’ The Belknap Press of Harvard Uni-

versity, pp. 521-522.

There might have been, and indeed there was, dis-

agreement with respect to ‘‘freedom of religion, free-

dom of the press and free speech,’’ but concerning the

right to trial by jury the delegates to the Convention

were in complete agreement. They were mindful

of the misuse of the contempt power by the colonial

eourts and wished to be protected from any such

oppressions in a future popular government.

James Madison, Father of the Constitution, in a

discussion about the manner in which the United

States Senate should be selected, said:

‘“‘T mean, however, to preserve the state rights

with the same care as I would trials by jury.”

Brant, Irving, James Madison, Father of the

Constitution, p. 89.

It is quite clear from the above that the right to a

trial by jury was considered the ultimate right, fun-

_ *

11

damental and admitting of no discussion. It is a con-

stitutional right that is conclusive and definitive.

It is an historical error to permit the courts to im-

pose fixed sentences of imprisonment. The courts

have the inherent power to impose conditional impris-

onment for the purpose of compelling a person to obey

a valid order. When it is asserted that the courts | ave

a right to go beyond compliance and sentence a man to

imprisonment for a fixed term, it would be well to re-

member that any such right is in conflict with a greater

right, the right to a trial by jury as doubly guaranteed

by the Constitution. (Article III & Sixth Amendment)

Petitioner will not attempt to repeat the discussion

of the dissenting Justices in United States v. Barnett,

376 U.S. 681, 12 L. Ed. 2d 23, or in Green v. United

States, 356 U.S. 165. They develop soundly the prop-

osition that criminal contempt is a crime which entitles

the defendant to a trial by jury.

The Sentence of Six Mor.ths Imprisonment Is Not Constitu-

tionally Permissible Because Contempt Powers in Admin-

istrative Law Cases Are Civil, Not Criminal

In this case, the Petitioner was sentenced to im-

prisonment for a period of six months for wilfully

causing violations of a pendente lite order of the

Court enforcing a cease and desist order of the Fed-

eral Trade Commission.

The Federal Trade Commission Act, Ch. 311, 38

Stat. 717, Title 15, See. 41, et cet., U.S.C.A., empowered

the Federal Trade Commission to issue orders direct-

ing violators to cease and desist from using unfair

methods of competition. It also provided that if the

Commission’s order was violated then the Commission

ere ay

12

could apply to a circuit Court of Appeals for enfore-

ment of the order.

There are other administrative agencies that have

been authorized by act of Congress to petition the Cir-

cuit Courts of Appeals for the enforcement of their

orders:

National Labor Relations Act, 49 Stat. 449, Title

29, Sec. 151, et cet., U.S.C.A., Ch. 372.

Federal Power Act, Title 16, Sec. 791, U.S.C.A.

Amend., Ch. 28541, Stat. 1063.

Federal Seed Act, Title 7, Sec. 1551, U.8.C.A., Ch.

615, 53 Stat. 1275.

Packers and Stockyards Act, Title 7, Sec. 181,

U.S.C.A., Ch. 64, 42 Stat. 159.

Natural Gas Act, Title 15, Sec. 717, U.S.C.A., Ch.

556, 52 Stat. 821.

None of these statutes contain a Congressional grant

to a United States Court of Appeals to try and punish

people for criminal contempt of court. Since the de-

visions of these federal bureaus affect more and more

of the particulars and details of the business life of our

country, it would be unjust to the businessmen of our

country to deny them the right to trial by jury.

In a National Labor Relations Act procedure, the

United States Court of Appeals, Second Circuit, re-

garded the viokations of Courts of Appeals orders as

civil contempts. N.L.R.B. v. Mastro Plastics Corp.,

261 Fed. 2d. 147.

In another case, the Second Circuit Court of Ap-

peals has said that in a violation of a Court of Ap-

peals order enforcing an NLRB order the purpose is

wholly remedial, and since its purpose is wholly re-

13

medial, the proceeding is one for civil contempt rather

than criminal contempt. N.L.R.B. v. Hopwood Retin-

ning Company, 104 F. 2d 302.

The Seventh Circuit Court of .ppeals in the case of

an FTC order regarded the contempt as criminal.

F.T.C. v. A. McLean & Son, 94 F.2d 802. _

There is a conflict between the Second Circuit Court

of Appeals and the Seventh Circuit Court of Appeals

on the question of whether the Courts of Appeals’ con-

tempt power in administrative law cases is civil or

criminal. None of the statutes above cited contain a

clear and unequivocal Congressional grant or indeed

say anything about enforcing the Courts’ orders. In

the absence of any Congressional authority, it is sub-

mitted that the administrative law cases should be

regarded as involving civil contempt.

The instant case vividly illustrates why violation

of a decree of a court enforcing an administrative

order should be considered civil contempt, not crim-

inal.

Prior to reference to the Court of Appeals, there

had been two years of hearings and over five thousand

pages of testimony. These hearing were conducted

by an FTC Examiner. In these hearings the rules

concerning the materiality and relevancy of evidence

are virtually suspended. Any evidence is admitted.

Proof by a fair preponderance of the evidence or be-

yond reasonable doubt is foreign to such hearings.

It is understandable that the Court of Appeals, al-

ready overburdened by a hugge volume of cases, would

seek to shorten the proceedings by relying upon the

14

Federal Trade Commission’s testimony and the aid of

its representatives.

In this case, the Court of Appeals appointed counsel

for the FTC as attorneys to prosecute for criminal

contempt (R. 6).

The proof that the Court of Appeals hearings took

on not only the color but also the substance of an FTC

hearing can be found in the Court’s opinion (R. 15).

In that Court order it can be seen that the basis for

the conviction and the imposition of six months im-

prisonment rested almost entively upon FTC type of

evidence, such as: Petitioner did not travel to meet

with Better Business Bureaus in various parts of

the country; he did not go out into the field to meet

with branch managers and salesmen to compel com-

pliance; he did not take pains to see that his entire

sales organization understood the seriousness of com-

pliance as did his successors in management by bring-

ing two thousand salesmen to Holland, Michigan; his

bulletin avoided using the word ‘‘discharge”’ and it

was also ineffective to influence radical changes in

Holland’s sales policy; the sales heirarchy was loose;

the relationship between the Petitioner and the sales

managers was tenuous; Petitioner remained aloof

from the sales managers, division managers and sales-

men.

There is no evidence that Petitioner’s conduct

caused any violation of any of the eight provisions of

the cease and desist order. In any event, the recorded

evidence falls far short of proving beyond a reasonable

doubt that Petitioner is guilty of knowingly, wilfully

and intentionally causing and aiding and abetting in

causing, in one or more instances, violations of each

—_

15

of the eight provisions in the cease and desist order.

Michaelson v. United States, 266 U.S. 42, 66 (1924) ;

Gompers v. Buck Stove and Range Company, 221 U.S.

418, 444 (1911).

There is no reason for relaxing the normal stand-

ards of proof required to sustain a conviction under

Title 18, Sec. 401(3). Green v. United States, 356 U.S.

165, 2 L. Ed. 2d 672, 711, dissenting opinion, Mr. Jus-

tice Brennan.

Petitioner made request for ‘‘special findings’’ un-

der Rule 23(¢) of the Rules of Criminal Procedure.

Although this rule says, ‘‘In a case tried without a

jury, the court shall make a general finding and shall

in addition on request find the facts specially,’’ the

Court, in lieu of making the ‘‘special findings’’ re-

quested, made its own findings of fact (R. 17).

The Petitioner’s conviction on this record is a clear

abuse of contempt power and clearly shows the cor-

rectness of the Second Circuit Court’s decisions re-

garding administrative law cases as involving civil

contempt.

The Imposition of the Sentence of Imprisonment for Six

Months After Denial of a Jury Trial Violates Article III

and the Sixth Amendment

This is the first time that an officer of a corporation

has been sentenced to imprisonment upon petition of

the Federal Trade Commission for criminal contempt

of a United States Court of Appeals order. The cor-

porate respondent was fined $100,000. Two other offi-

cers of the company were fined $500 each, and the

Petitioner was sentenced to six months in prison be-

cause he was the dominant head of the company from

——— ,

A anon a

16

August 5, 1959, until May, 1962 (R. 20) and failed

to make policy changes in the company’s business.

The Petitioner had not been an officer of the com-

pany since May, 1962. The Judgment of the Court

of Appeals was imposed January 27, 1965. For two

and one-half years, the Petitioner’s successors in man-

agement had ceased and desisted in such a manner

as to win the compliments of the Circuit Court of Ap-

peals (R. 21). In fact, during this period of time,

the company had completely withdrawn from the busi-

ness of replacement of furnaces, which is the area in

which the violation is alleged. The sentence is there-

fore entirely punitive. The absence of any necessity

of assuring future compliance should have been con-

sidered in imposing sentence. United States v. United

Mine Workers of America, 330 U.S. 258, 303.

The Covrt of Appeals should have used the least

possible power adequate to enforce its order and pro-

tect its dixmity. Bigelow v. RKO Radio Pictures, 78

F. Supp. 250; In the Matter of Criminal Contempt of

Thomas C. McConnell, Petitioner, 370 U.S. 230, 8 L.

Ed. 2d 434.

In Ballantyne v. United States, 237 F.2d 657, 667,

Circuit Judge Cameron stated:

‘*Tt is abhorrent to Anglo-Saxon justice as applied

in this country that a man, however lofty his sta-

tion or venerated his vestments, should have the

pen of taking another man’s liberty from him.

ociety has permitted only one exception, a limited

right of courts to punish for contempt. But that

right has been grudgingly granted, has been held

down uniformly to the least possible power ade-

quate to the end proposed.”’

17

The Holland Company operated in 44 states with

475 branch offices. It had a field organization of ap-

proximately 5,000 employees. Holland Furnace Com-

pany, Petitioner, v. Federal Trade Commission, Re-

spondent, No. 12451, U.S. Court of Appeals, 7th Cir-

cuit, 295 F. 2d 302. Modern business practices re-

quire that officers of large corporations delegate duties

to and rely upon other officers and employees. It is

unrealistic to assume that, because a man is president

and the dominant head of Holland Furnace Company,

he is responsible for any actions of subordinate sales

employees that might have violated one or more of

the eight prohibitions covered by the order. Peti-

tioner’s conviction was not based upon a charge or evi-

dence that he personally engaged in any of the eight

deceptive practices. There is no evidence that there

has been a single prosecution of any sales employee

for the crimes alleged in the cease and desist order.

| The sentence of the Court of Appeals is not based

upon any affirmative action but rather on the failure

by Petitioner to make policy changes. Since none

of the sales policies and other matters relied upon

by the Court of Appeals were required to be changed

or were covered in any way by the FTC order as en-

| forced by the Court’s order, the Petitioner’s failure

to act in accordance with the Court’s idea of the way

the business should be conducted ought not to subject

him to a penalty of six months. It is fundamental

that no man should be held criminally responsible

for conduct which he could not understand to be

proscribed or required. United States v. Harris, 347

U.S. 612, 617. The Petitioner certainly should not

be sentenced to prison for six months for conduct

18

which was not proscribed or required in the cea‘ » and

desist order. In Re Floersheim, 316 F. 2d 423 (9tir

Circuit, 1963).

The Floersheim case, supra, was a proceeding for

criminal contempt of an order of the Court of Ap-

peals enforcing an FTC cease and desist order. It

was contended by the FTC that the forms used by

the respondent were too ‘‘official looking’’ or ‘“‘too

demanding” or that the paper used was of a color and

design sometimes used on checks, or that the address

to which cards were to be mailed in Washington, D. C.,

assumed the government must be involved. The Court

rejected such contentions as a basis for a contempt con-

viction, saying:

‘‘The short answer to these complaints is that the

cease and desist order, as drawn, does not forbid

such actions or use.’’ 316 F’. 2d 428.

Petitioner’s conviction, since predicated upon an un-

foreseeable and ex post facto expansion of the narrow

requirements of the Court order, should not subject

him to a sentence of six months imprisonment.

In the instant case, the Petitioner could not reason-

ably have been expected to construe the Court order

as requiring a change in a long-standing practice of

paying salesmen on a commission basis or as calling

for a reduction in the selling prices of heating equip-

ment (R. 21). The cease and desist order, as drawn,

did not forbid such actions, and the Petitioner could

not therefore have had a specific intent to cause viola-

tions of an order which did not forbid paying salesmen

commissions or order a reduction in the selling prices

of heating equipment. Assuming that there is some

evidence to prove that subordinate sales employees

19

did violate the order, there is simply no evidence what-

soever that Petitioner acted with the requisite speci-

fic intent or that his conduct was the cause of such

violations. It is well settled that the intention with

which acts of contempt have been committed must

necessarily and properly have an important bearing

on the degree of guilt and the penalty which should

be imposed. Cammer v. United States, 300 U.S. 399,

100 L. Ed. 474.

Petitioner was not a party to the cease and desist

order of the Federal Trade Commission (R. 1). Peti-

tioner was not a party to the Circuit Court of Appeals

cease and desist order (R. 3). This lack of intention

becomes increasingly apparent when it is understood

that Petitioner was not a party to any proceedings up

to ard including the pendente lite order issued by the

Court of Appeals and that there is not the slightest

evidence that Petitioner’s conduct caused any viola-

tion of any of the eight provisions of the cease and

desist order. All of this shows a lack of intention to

commit an act of contempt, which should have an im-

portant bearing on any penalty which should have been

imposed.

A sentence of six months’ imprisonment after the

denial of Petitioner’s demand for a trial by jury vio-

lates the Sixth Amendment. This was a criminal prose-

cution that grew out of a cease and desist order of

the Federal Trade Commission issued July 7, 1958

(R. 1), and the FTC attorneys were appointed to

prosecute for criminal contempt on April 26, 1963. It

can readily be seen that the Petitioner did not enjoy

the right to a speedy and public trial by an impartial

jury. Neither did he enjoy the right to a speedy and

20

public trial by an impartial jury of the State and

district wherein the crime shall have been committed.

In the case of District of Columbia v. Clawans, 300

U.S. 617, 81 L. Ed. 843, 850, Mr. Justice McReynolds,

joined by Mr. Justice Butler in dissenting in part, had

this to say:

‘*‘We cannot agree that when a citizen is put on

trial for an offense punishable by 90 days in jail

or a fine of $300.00, the prosecution is nc* criminal

within the Sixth Amendment. In a suit at com-

mon law to recover above $20.00, a jury trial is

assured. And to us it seems improbaple that while

providing for this protection in such a trifling

matter the framers of the Constitution intended

that it might be denied where imprisonment for

a considerable time or liability for fifteen times

$20.00 confronts the accused.

‘*Tn view of the Opinion just announced, it seems

permissible to inquire what will become of the

other solemn declarations of the Amendment.

Constitutional guaranties ought not to be sub-

ordinated to convenience, nor denied upon ques-

tionable precedents or uncertain reasoning.”’

It is fair to comment that Mr. Justice McReynolds

and Mr. Justice Butler would view with abhorrence

a sentence of six months’ imprisonment imposed with-

out a jury trial and growing out of a violation of an

FTC order.

On October 9, 1963, the United States Court of Ap-

peals for the Seventh Cirenit ordered the Petitioner

to file an election of trial by jury or a waiver of a

jury trial (R. 11). It is a reasonable inference from

this action that the Court on that date at least felt

that the Petitioner was entitled to a trial by jury.

21

On November 8, 1963, the Petitioner elected a trial

by jury (R. 12). It was not until May 27, 1964, that

the Court determined that the Petitioner was not en-

titled to a trial by jury and denied the demand for

a jury trial made in accordance with its order of Oc-

tober 9, 1963. (R. 11, R. 14). United States v.

Barnett, 376 U.S. 681, was decided in April, 1964. On

January 27, 1965, the Court sentenced the Petitioner

to imprisonment for a period of six months,

There is nothing in United States v. Barnett, supra,

suggesting that the petty offense punishment limits

contained in 18 U.S.C. See. 1(3) are applicable to a

contempt proceeding, nor does it define petty offense.

The penalty that may be imposed in a non-jury trial

criminal contempt case raises an important constitu-

tional question under Article II, See, 2, para. 3, and

the Sixth Amendment which this Court, not Congress,

must decide.

In the United States v. Barnett case, supra, it was

undisputed that there were affirmative actions of con-

tempt, that there was a specific intent to commit con-

tempt, and that there had been no compliance. In the

mstant case, there had been compliance for a period

of two and one-half years before sentence (R. 20).

There was no specific intent to commit contempt of

the cease and desist order because the things upon

which the Court of Appeals bottomed its sentence were

not things that were contained in the cease and desist

order (R. 1, R. 15). Therefore, the severity of the

sentence of six months, without a jury trial that was

inferred from the Barnett case, was in violation of

Article III and Amendment 6.

eee

22

It must be borne in mind that this was in the be-

ginning a Federal Trade Commission cease and desist

order later adopted by the Court of Appeals for en-

forcement. These proceedings are almost invariably

against corporations where fines are the usual pun-

ishment. In this case, the Holland Company was fined

$100,000, the largest fine in the history of FTC actions,

whether in a civil penalty suit (15 U.S.C., See. 45(6)

(1)) or a contempt proceeding. See Vol. 5, CCH

Trade Reg. Rep. paras. 9701.40 and 9703 and cases

cited therein.

In addition, two other officers were fined $500 each,

but the Petitioner, who was President of the Corpora-

tion, was sentenced to six months’ imprisonment. This

is the first time in an FTC hearing that an officer of

a corporation has been sentenced to a fixed term of

imprisonment. Six months’ imprisonment for crimi-

inal contempt is a far greater sentence than is usually

given for criminal violations of the antitrust law (see

Tefft, United States v. Barnett, Supreme Court Re-

view, 1964, at p. 135).

A sentence of six months’ imprisonment by a Circuit

Court of Appeals is so substantial that it carries with

it all of the odium attached to a sentence of two or

three years. It destroys a man’s reputation and takes

away from him his ability to make a living in the busi-

ness world. It forces him to live the rest of his years

in shame and disgrace and dishonors his family. This

punishment should not be imposed upon him without

the opportunity of having the facts in his case passed

upon by a jury of his peers, as is doubly guaranteed

by Article III and Amendment 6 of the United States

Constitution.

23

CONCLUSION

For the foregoing reasons, we respectfully submit

that the judgment of the Seventh Circuit Court of

Appeals should be reversed.

Respectfully submitted,

JosEPH E, Casey

Tuomas B. Scorr

1200 - 18th Street, N W.

Washington, D. C. 20036

Counsel for Petitioner

January, 1966.