# Ricci v. Chicago Mercantile Exchange/Dissent Marshall

* Court Documents
* Case Syllabus
* Opinion of the Court
* Concurring Opinion Burger
* Dissenting Opinions Douglas Marshall
[p309] MR. JUSTICE MARSHALL, with whom MR. JUSTICE DOUGLAS, MR. JUSTICE STEWART, and MR. JUSTICE POWELL join, dissenting.
The majority accurately describes the provisions of the Commodity Exchange Act and the facts of this case. But my Brethren nowhere explain why the lower court should stay its hand pending action by an agency which in all likelihood lacks the statutory power to [p310] resolve an issue in the lawsuit. Instead of carefully balancing the advantages and disadvantages of deferral to the agency, the Court seems to apply a mechanical test which requires judicial deference despite the substantial probability that the agency will have nothing of relevance to contribute. The principle that should govern this case can be stated quite adequately in a single sentence: An agency cannot have primary jurisdiction over a dispute when it probably lacks jurisdiction in the first place. The majority seemingly departs from this principle and, hence, needlessly bifurcates and complicates a suit that could readily be resolved by the District Court. I must therefore respectfully dissent.

## I

At the outset, it should be noted that the Commodity Exchange Act fails to provide petitioner with a means by which he can require the Commodity Exchange Commission or the Secretary of Agriculture to consider his case. The Act provides that "[t]he Secretary of Agriculture is authorized... to disapprove any bylaw, rule, regulation, or resolution made, issued or proposed by a contract market." 7 U.S.C. § 12a (7) (emphasis added). Similarly, "[i]f any contact market is not [p311] enforcing or has not enforced its rules of government made a condition of its designation... the commission may... make and enter an order directing that such contract market... shall cease and desist from such violation." 7 U.S.C. § 13a (emphasis added). But although the relevant regulations provide a means by which a private party may report apparent violations—see 17 CFR §§ 0.3 (a), 0.53 (a)—the Act nowhere requires the Secretary or the Commission to act on these reports. Cf. Vaca v. Sipes, 386 U.S. 171, 182 (1967). On the contrary, the Act expressly provides that "[n]othing in this chapter shall be construed as requiring the Secretary of Agriculture or the commission to report minor violations of this chapter for prosecution, whenever it appears that the public interest does not require such action." 7 U.S.C. § 13c (b).
Moreover, even if the Secretary or the Commission does institute proceedings at petitioner's behest, it is by no means certain that petitioner will be permitted to participate in those proceedings. The Commission's rules state that "[t]he person filing an application [to institute proceedings] shall have no legal status in the proceeding which may be instituted as a result of the application, except where the applicant may be permitted to intervene therein... or may be called as a witness." 17 CFR § 0.53 (b) (emphasis added). See also 17 CFR § 0.3 (b). Although Commission rules provide for the intervention of private parties, the Commission apparently has unfettered discretion in deciding whether to allow intervention. See 17 CFR § 0.58. See also 17 CFR § 0.8.
[p312] Should the Commission or the Secretary not allow intervention in this case, this Court's decision will leave the District Judge on the horns of a serious dilemma. Normally, when a court stays its hand to allow agency proceedings, the result of those proceedings may not be collaterally attacked when the case returns to the court. See, e.g., Port of Boston Marine Terminal Assn. v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 71-72 (1970). But if the Commission decides a major issue in this lawsuit without allowing petitioner to intervene, failure to permit collateral attack would result in petitioner's antitrust case being resolved against him without his participation. On the other hand, if the District Court undertakes a de novo reconsideration of the issues submitted to the Commission, the Commission's decision, together with the concomitant delay, will be for naught.

## II

The Court, then, remands petitioner to a procedure which he has no power to invoke, in which he has no right to participate if it is invoked, and which cannot provide the remedy he seeks even if he is allowed to participate. Yet all this might be justifiable if either the Commission or the Secretary were likely to make a meaningful contribution to the resolution of this lawsuit. We have held that "[w]hen there is a basis for judicial action, independent of agency proceedings, courts [p313] may route the threshold decision as to certain issues to the agency charged with primary responsibility for governmental supervision or control of the particular industry or activity involved." Id., at 68. The reason for this policy is self-evident: "in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over." Far East Conference v. United States, 342 U.S. 570, 574 (1952).
Thus, if the Commodity Exchange Commission had jurisdiction over some aspect of this suit and special expertise in the area of its jurisdiction, a case could, perhaps, be made for awaiting its decision. For example, if the Commission had been given the power to grant general immunity to antitrust violators, sound judicial administration would require consultation with it before proceeding with the antitrust suit. But, as the majority itself recognizes, there is no indication that Congress intended to grant the Commission any such power. As this Court held in Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 218 (1966), "[w]e have long recognized that the antitrust laws represent a fundamental national economic policy and have therefore concluded that we cannot lightly assume that the enactment of a special regulatory scheme for particular aspects of an industry was intended to render the more general provisions of the antitrust laws wholly inapplicable to that industry." In practice, this principle has meant that "[r]epeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, and have only been found in cases of plain repugnancy between the antitrust and regulatory provisions." United States v. Philadelphia National Bank, 374 U.S. 321, 350-351 (1963) (footnotes omitted). Such repugnancy [p314] has been found to exist only in those rare cases where regulation of the industry is pervasive and Congress plainly intended to substitute Government supervision for competition. See, e.g., Pan American World Airways v. United States, 371 U.S. 296 (1963). Cf. United States v. Radio Corp. of America, 358 U.S. 334 (1959).
Obviously, Congress has not granted the Commission the sort of pervasive power over commodity exchanges that would give rise to antitrust exemption. On the contrary, although the Commission and the Secretary have some general policing duties, day-to-day regulation has been largely left to the industry itself. Where, as here, the industry is given the power to control its own affairs, it is particularly important to make certain that this power is not abused for the purpose of eliminating competition. Cf. Silver v. New York Stock Exchange, 373 U.S. 341 (1963).
The majority cannot rely, then, on the Commission's general power to immunize antitrust violations. Its argument, as I understand it, is more subtle and, at the same time, more attenuated. As we recognized in Silver v. New York Stock Exchange, supra, the very purpose of an exchange is to exclude nonmembers from participation in trading. Were it not for the legislative authorization of such exchanges, they would constitute group boycotts that are per se violations of the Sherman Act. See, e.g., Klor's, Inc. v. Broadway-Hale Stores, 359 U.S. 207 (1959). Thus, although Congress cannot be taken to have granted total antitrust immunity to trading exchanges, some accommodation must be reached between usual antitrust principles and the self-regulatory and exclusionary powers that the exchanges were obviously intended to exercise. In Silver, the Court reached such an accommodation by holding that "exchange self-regulation is to be regarded [p315] as justified in response to antitrust charges only to the extent necessary to protect the achievement of the aims of the Securities Exchange Act." 373 U.S., at 361. Thus, if an exchange rule serves a valid self-regulatory purpose, the mere fact that it excludes some individuals from competition does not mean that an antitrust violation has been made out. But where, as in Silver itself, the rule fails to serve any legitimate self-regulatory goal, its exclusionary effect can lay the predicate for a Sherman Act violation.
Applying Silver to the facts of this case, the majority argues that the Commission has primary jurisdiction to determine facts relevant to the question whether the Chicago Mercantile Exchange's rules and its application of those rules are in conformity with the self-regulatory purposes of the Commodity Exchange Act. Superficially, at least, that argument has considerable force. It is marred, however, by two flaws which, in my view, make it ultimately fallacious.
First, it is important to note that petitioner's complaint does not merely allege that he has been excluded from trading or that an Exchange rule has been broken. Rather, he maintains that the Exchange and certain of its members entered a deliberate conspiracy against him and that this was done "maliciously, willfully, knowingly, unlawfully and without just cause or provocation, with the unlawful and illegal intent, purpose and object of restraining and preventing plaintiff from exercising an essential and necessary part of his lawful trade or business in interstate commerce." Whatever the legitimate self-regulatory goals of the Chicago Mercantile Exchange, I cannot believe that they include the deliberate and malicious suppression of competition. Surely the courts do not need the Commodity Exchange Commission to tell them that such conduct is antithetical to the purposes of the Commodity Exchange Act. We have held that [p316] principles of administrative comity preclude courts from finding antitrust violations "only... when the defendants' conduct is arguably lawful" under the administrative scheme. Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 222 (1966). I would apply that principle here and hold that deliberate conspiracies with the sole purpose of suppressing competition are not "arguably lawful" under the Commodity Exchange Act.
To be sure, it may ultimately develop that petitioner is unable to substantiate all of his allegations and that the actions of the Exchange are less sinister than he has made out. Petitioner might be required to submit affidavits at trial demonstrating that his allegations of a deliberate conspiracy are factually supported in order to forestall a remand to the Commission. And if it becomes clear at any time during trial that the conspiracy allegations are insubstantial, there will then be time enough to reconsider the propriety of a delay pending Commission action. But I would not deprive petitioner of immediate access to the courts until he has had an opportunity to prove that the case is as clear as he says it is.
Moreover, even if petitioner's allegations are for some reason insufficient to forestall a remand to the Commission, I still doubt that the Court of Appeals acted properly in ordering a stay of the litigation. The majority's position is premised on the assumption that the [p317] Commission has jurisdiction to determine facts relevant to whether Exchange rules, or the application of those rules, is consistent with legitimate self-regulatory ends. But a careful examination of the Act makes plain that this assumption is plainly incorrect. Neither the agency nor the Secretary has been granted a roving commission to oversee the proper functioning of the various exchanges. Rather, the powers conferred in the Act are limited and discrete, and none of them grants to the Commission the tools necessary for resolving any issue in this dispute.
The Commission does have authority to oversee the exchanges' administration of their own rules. 7 U.S.C. § 7a (8) requires exchanges to "[e]nforce all bylaws, rules, regulations, and resolutions, made or issued by it or by the governing board thereof or any committee, which relate to... trading requirements," and 7 U.S.C. § 13a permits the Commission to issue a cease-and-desist order "[i]f any contract market is not enforcing or has not enforced its rules of government made a condition of its designation as set forth in section 7 of this title." But it should be obvious that these provisions do not [p318] authorize the Commission to resolve the Silver issue. The quoted sections permit the Commission to determine whether the rules made by an exchange are being enforced. But they do not permit the Commission to decide whether either the rules, or their application, serves a legitimate self-regulatory goal, which is the only relevant issue in the antitrust suit. Thus, it is entirely possible that although the Chicago Mercantile Exchange has respected its own rules to the letter, those rules themselves are impermissible under the Sherman Act. Similarly, even if the rules are facially permissible, it is possible that, as applied in this case, they restrain competition without any offsetting self-regulatory gain. The mere fact that an exchange is obeying its own rules—the only question that 7 U.S.C. §§ 7a (8) and 13a permit the Commission to answer—does not tell us whether either the rules or their application meets the Silver test.
The Secretary is given supplementary power to invalidate certain exchange rules. But this power, too, is extremely limited. Title 7 U.S.C. § 12a (7) empowers the Secretary to "disapprove any bylaw, rule, regulation, or resolution made, issued or proposed by a contract market... which relates to... trading requirements, when he finds that such bylaw, rule, regulation, or resolution violates or will violate any of the provisions of this chapter, or any of the rules, regulations, or orders of the Secretary of Agriculture or the commission thereunder." (Emphasis added.) The "chapter" referred to is, of course, the Commodity Exchange Act, not the Sherman Act, and no provision of the Commodity Exchange Act incorporates Sherman Act principles. It follows that § 12a (7) does not empower the Secretary to invalidate exchange rules because they conflict with antitrust policy.
[p319] Moreover, as noted above, the restrictions placed on the exchanges by the Act are far from pervasive, and the Secretary's power to invalidate rules is therefore similarly restricted. Surely, this power does not include the ability to invalidate any rule that fails to serve a self-regulatory end. Such a reading of the Act would mean that Congress thought it had prohibited everything an exchange might do that would not serve self-regulatory purposes—a reading that defies common sense. Thus, if the Secretary were to refuse to invalidate the rules involved in this action, his decision would only mean that those rules were not prohibited by any specific provision of the Commodity Exchange Act. The decision could in no way be taken to mean that the rule serves any useful purpose or that it meets the Silver requirement.

## III

I do not mean to suggest that the Commission's consideration of this case is certain to prove totally useless when the District Court ultimately reserves its deliberations. Should the Secretary invalidate the rules that the Commission relies on, for example, his action would materially aid petitioner, although his claim would still [p320] not be conclusively established since the Exchange's actions might be justified by a legitimate regulatory purpose, even though the rule relied upon violated a provision of the Act. Similarly, the Commission may make findings of fact or statements as to the law within areas of its expertise which the court might find helpful.
But I had not thought that petitioner need meet the burden of showing that resort to administrative remedies would be totally useless before securing adjudication from a court. Indeed, in virtually every suit involving a regulated industry, there is something of value that an administrative agency might contribute if given the opportunity. But we have never suggested that such suits must therefore invariably be postponed while the agency is consulted.
It has been argued that the doctrine of primary jurisdiction involves a mere postponement, rather than relinquishment of judicial jurisdiction. See, e.g., 3 K. Davis, Administrative Law Treatise 3-4 (1958). However, that observation should not be taken to mean that invocation of the doctrine therefore imposes no costs. On the contrary, in these days of crowded dockets and long court delays, the doctrine frequently prolongs and complicates litigation. More fundamentally, invocation of the doctrine derogates from the principle that except in extraordinary situations, every citizen is entitled to call upon the judiciary for expeditious vindication of his legal claims of right. As we have said in a somewhat different context "due process requires, at a minimum, that absent a countervailing state interest of overriding significance, persons forced to settle their claims of right and duty through the judicial process must be given a meaningful opportunity to be heard." Boddie v. Connecticut, 401 U.S. 371, 377 (1971). And surely the right to a "meaningful opportunity to be heard" comprehends within it the right to be heard without unreasonable delay. This [p321] principle is especially worthy of protection in the antitrust field where it is unmistakably clear that Congress has given courts, rather than agencies, the primary duty to act. Cf. California v. FPC, 369 U.S. 482, 487-490 (1962).
To be sure, judicial deference to agency jurisdiction remains important, particularly in those areas where the responsibilities of judges and administrators meet and overlap. But the primary jurisdiction doctrine, like the related exhaustion requirement, must not be "applied blindly in every case" without "an understanding of its purposes and of the particular administrative scheme involved." McKart v. United States, 395 U.S. 185, 193, 201 (1969). Wise use of the doctrine necessitates a careful balance of the benefits to be derived from utilization of agency processes as against the costs in complication and delay. Where the plaintiff has no means of invoking agency jurisdiction, where the agency rules do not guarantee the plaintiff a means of participation in the administrative proceedings, and where the likelihood of a meaningful agency input into the judicial process is remote, I would strike a balance in favor of immediate court action. Since the majority's scale is apparently differently calibrated, I must respectfully dissent.

## Notes

* ↑ The majority suggests that the Court "need not finally decide the jurisdictional issue for present purposes." Rather, it holds that the likelihood of agency jurisdiction is sufficient to require judicial abstention. This approach could well lead to an extraordinary result. Since the Court expressly leaves the jurisdictional issue open, it is possible that at some later date, it will be held that the agency lacks jurisdiction over this dispute. In that event, petitioner will have been forced to resort to possibly lengthy administrative proceedings, only to be told at their conclusion that they were irrelevant to his case. My approach is somewhat different. I submit that the jurisdiction of the relevant agency is a threshold issue in cases such as this and that before a court defers to agency judgment, it should authoritatively determine whether the agency has power to act.
* ↑ I do not intend to foreclose the possibility that petitioner might be able to intervene under §6 (a) of the Administrative Procedure Act, 5 U.S.C. § 555 (b). See, e.g., American Communications Assn. v. United States, 298 F.2d 648, 650 (CA2 1962). Petitioner's ability to invoke this provision is, however, problematical at best. Cf. Easton Utilities Comm'n v. AEC, 137 U.S. App. D.C. 359, 362-365, 424 F.2d 847, 850-853 (1970). See generally Shapiro, Some Thoughts on Intervention before Courts, Agencies, and Arbitrators, 81 Harv. L. Rev. 721, 764-767 (1968).
* ↑ Although the Commission may issue cease-and-desist orders and recommend criminal prosecutions, it, of course, lacks authority to award treble damages.
* ↑ This position does not, as the majority argues, "[ignore]... the factfinding function of the Commission." Rather, it is premised on the seemingly obvious proposition that there must be a jurisdictional predicate to support agency factfinding. I can find nothing in the Commodity Exchange Act that authorizes the Commission to determine whether exchanges and their members are engaged in conspiracies or whether the actions taken by exchanges are motivated by anticompetitive purposes. Nor is it clear to me why such factfinding might be made in the course of determining whether an Exchange rule had been violated.
* ↑ But cf. n. 1, supra.
* ↑ To be sure, as the majority recognizes, the Commission does have factfinding power and, in the course of determining whether the Exchange rules have been violated, it might exercise that power to resolve the underlying facts in dispute. But the majority cites no cases where the mere factfinding power of an agency has been used to invoke primary jurisdiction in the absence of an issue of law or a mixed question of law and fact common to the agency proceeding and the court action. The Commission may have special expertise that will aid it to determine whether a given rule has been violated or whether the rule is consistent with the Act. But it has no special ability to determine pure questions of fact unrelated to the legal standard relevant in the antitrust suit. On the contrary, I had thought that it was our court system—with its long tradition of jury trials, adversary proceedings, and highly developed evidentiary principles—that was "expert" in the simple factfinding process.
* ↑ The Silver case itself neatly illustrates this fact. In Silver, the rule in question provided for the termination of wire connections with Exchange members without notice or hearing. This Court held that the failure to provide notice or hearing served no legitimate self-regulatory goal and therefore held that an antitrust violation had been made out. Had the Silver case arisen in the context of the Commodity Exchange Act, the Secretary could not have invalidated the Exchange rule since no provision of the Act requires an exchange to hold hearings before it takes disciplinary action. But, of course, the Secretary's decision not to invalidate the rule would in no way have changed the Court's ultimate conclusion that the rule served no valid self-regulatory purpose. Hence, invocation of the Secretary's primary jurisdiction would have been a useless act.