United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 8, 2009 Decided October 23, 2009

No. 08-5205

FEDERAL TRADE COMMISSION,

APPELLEE

v.

SCOTT TARRIFF, ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 1:08-mc-00217)

Eric Grannon argued the cause for appellants. With him on

the briefs was J. Mark Gidley. Christopher M. Curran entered

an appearance.

Lawrence DeMille-Wagman, Assistant General Counsel,

Federal Trade Commission, argued the cause for appellee. With

him on the briefs were Willard K. Tom, General Counsel, and

John F. Daly, Deputy General Counsel.

Before SENTELLE, Chief Judge; TATEL, Circuit Judge; and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge SENTELLE.
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SENTELLE, Chief Judge: Scott Tarriff and others

(collectively “appellants”) appeal from an order of the district

court granting a petition to enforce subpoenas ad testificandum

issued to pharmaceutical company officers in the course of an

ongoing Federal Trade Commission law enforcement

investigation into agreements among companies suspected of

unlawfully delaying entry of lower cost generic versions of a

drug. Appellants’ sole basis for asserting the invalidity of the

subpoenas is that the FTC proposed to record the testimony, not

only by the stenographic method mandated in the Commission’s

rules, but also by videotape. Finding this objection to be utterly

without merit, the district court granted the petition for

enforcement of the subpoenas. We agree and affirm.

* * *

In an ongoing investigation, the Commission seeks to

determine whether agreements among Unimed Pharmaceuticals,

Inc., Laboratories Besins Iscovesco, and Solvay

Pharmaceuticals, Inc., or any other agreements, unlawfully

delayed entry of a lower cost generic version of a drug called

AndroGel in violation of section 5 of the FTC Act, 15 U.S.C. §

45. See FTC v. Tarriff, 557 F. Supp. 2d 92, 93 (D.D.C. 2008).

The FTC issued subpoenas ad testificandum for corporate

officials, including appellants herein. The Commission’s rules

of practice governing investigative hearings provide for

stenographic recording, and the first round of subpoenas

referenced stenographic recording of the testimony adduced

under the subpoenas. Thereafter, the Commission on

February 13, 2008, issued the amended subpoenas before us in

the current litigation, which provided for sound and visual

recording in addition to stenographic recording of the testimony.

Appellants objected on the basis that the rules of the FTC do not

provide for recording by other than stenographic means. The

Commission rejected the objection. Some of the subpoenaed
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1

Although the depositions contemplated by the subpoenas

have now been completed, we agree with the parties that the

controversy is saved from mootness by the prayer of appellants that

we order the Commission to destroy the videotapes of the proceedings.

See Church of Scientology of California v. United States, 506 U.S. 9

(1992) (compliance with summons for production of audiotapes did

not moot church’s appeal because court has power to order

government to return or destroy tapes); Office of Thrift Supervision v.

Dobbs, 931 F.2d 956, 958 (D.C. Cir. 1991) (finding that compliance

with summons mooted appeal, but stating that the “case would present

a different issue were Dobbs requesting the government to return

documents he had provided, rather than merely to seal his testimony”).

witnesses notified the Commission of their intention not to

comply with the subpoenas. The Commission brought the

instant action for enforcement in the district court. The district

court granted the petition and ordered the subpoenas enforced.

Appellants filed the appeal now before us.1

Appellants’ objection to the subpoenas relies solely on the

proposition that the rule of the Commission, by mandating that

“[investigational] hearings shall be stenographically reported

and a transcript thereof shall be made a part of the record of the

investigation,” 16 C.F.R. § 2.8(b), somehow precludes the

possibility that the Commission could record the proceedings by

other methods as well. Lest we be misunderstood, the

Commission does not propose to use video methods of

transcription instead of stenographic transcription, but only in

addition thereto. Nor do appellants argue that the taking of the

videographic transcription is in any fashion inconsistent with, or

the cause of any interference with, stenographic transcription

mandated by the rule. Instead, respondents rest solely on the

novel proposition that somehow the use of the word “shall” in

the rule not only requires that the stenographic transcription be

prepared, but also precludes the Commission from doing

anything else in the way of transcription. 
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Like the district court, we are unconvinced “that the word

‘shall’ expresses not only a mandatory direction, but also a

limiting principle.” FTC v. Tarriff, 557 F. Supp. 2d at 94. It is

fixed law that words of statutes or regulations must be given

their “ordinary, contemporary, common meaning.” Williams v.

Taylor, 529 U.S. 420, 431 (2000) (citations omitted). It is also

fixed usage that “shall” means something on the order of “must”

or “will.” See, e.g., Black’s Law Dictionary 1407 (8th ed. 2004)

(defining “shall” as “has a duty to; more broadly, is required

to”). We know of no usage, nor do appellants bring forward

any, that suggests that the use of “shall” mandating one act

implies a corresponding “shall not” forbidding other acts not

inconsistent with the mandated performance. Borrowing from

the Commission’s litigation documents, the district court noted

an illustrative example of “shall” in common parlance: A

direction to a teenage son that he “shall” clean his room does not

thereby forbid him from taking out the trash, walking the dog,

or going to school. Appellants are without contra example.

Appellants offer as authority for their novel proposition the

Supreme Court decision in National Association of Home

Builders v. Defenders of Wildlife, 551 U.S. 644 (2007), which

they assert “held that a provision’s use of ‘shall’ as a directive

‘does not just set forth minimum requirements . . . . The

provision operates as a ceiling as well as a floor.’” (Emphasis

in original.) It is indeed true that the high court used the

language appellants quote to us, 551 U.S. at 663, but not in a

context remotely supporting appellants’ construction of the

Commission’s rule. In National Association of Home Builders,

the Supreme Court was construing § 402(b) of the Federal Water

Pollution Control Act, 33 U.S.C. § 1342(b), which mandates that

the Environmental Protection Agency (EPA) “shall approve”

transfer of certain permitting authority to a state upon a showing

that the state has met nine specified criteria. In attempting to

reconcile that statute with § 7(a)(2) of the Endangered Species
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Act, the Ninth Circuit held that the EPA must also require the

completion of another criterion before transferring the

permitting authority. See Defenders of Wildlife v. USEPA, 420

F.3d 946 (9th Cir. 2005). It was in the context of reversing the

Ninth Circuit’s imposition of an additional criterion into the

triggering mechanism for the mandatory performance of a duty

created by the word “shall” in the statute that the Supreme Court

described the statutory mandate as “operating as a ceiling as

well as a floor.” 551 U.S. at 646. Contrary to appellants’

argument, the Supreme Court’s use of “ceiling” and “floor” had

nothing to do with the possibility that the agency, in carrying out

the statutory mandate, might do some other act, as well as that

mandated by the statute. The floor and ceiling referred to by the

Supreme Court had to do with the triggering mechanism of the

mandate, not the carrying out of the mandate once triggered. In

other words, once the nine statutory criteria were accomplished,

the floor of necessity was met, and neither the agency nor the

Ninth Circuit could erect a higher ceiling that would prevent the

mandate from operating. Nonetheless, so far as we know, the

EPA could do other things while transferring the permitting

authority. It could, for example, send a nice congratulatory note

to the state receiving the authority, thank the governor for the

state’s efforts, or create a videographic transcription of its

meetings. Appellants’ argument, that the Supreme Court’s

decision is somehow authority for the proposition that the term

“shall” is a mandate not only to do one thing but to cease and

refrain from doing all others, borders on sophistry. 

Appellants also rely on Beverly Health and Rehabilitation

Services, Inc. v. NLRB, 317 F.3d 316 (D.C. Cir. 2003), which,

if anything, has less to do with the current controversy than

National Association of Home Builders. In that case, this court

reversed the decision of the NLRB approving the unilateral

extension of a strike deadline notice by a union. The statute

mandated that a strike notice state “the date and time that such
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action will commence” and allowed that a “notice, once given,

may be extended by the written agreement of both parties.” 29

U.S.C. § 158(g). Unsurprisingly, we held that this language

precluded the NLRB’s approval of the unilateral extension by

the union. Unconvincingly, appellants assert that this is

authority for the proposition that unambiguously mandatory

language precludes additional conduct even absent the use of the

term “only.” The lack of parallel between Beverly Health and

the present controversy is too apparent to require much

explanation. The construction offered by the NLRB in Beverly

Health would have rendered the operative sentence surplusage.

If either party could unilaterally extend the deadline, it would

have made no sense for Congress to have specified that the two

of them acting together could do it in writing. It was apparent

in that case that Congress had provided one and only one means

for extension. Nothing approaching that exists in the matter

before us. It is perfectly possible—indeed, it has already been

done—for the Commission to transcribe the testimony by

videography without interfering with the stenographic reporting

mandated by the rule. Nothing is rendered surplusage. The

mandate of the rule is not defeated.

The closest appellants come to authority supporting their

proposition is a 1968 district court decision, U.S. Steel Corp. v.

United States, 43 F.R.D. 447 (S.D.N.Y. 1968). In that case, a

judge construed the language of the 1967 version of Federal

Rule of Civil Procedure 30(c), which read: “The testimony shall

be taken stenographically and transcribed unless the parties

agree otherwise.” The district judge in U.S. Steel Corp. held

that this precluded the use of tape recording. We note that the

“unless the parties agree otherwise” language renders that rule

distinguishable from Commission Rule 2.8. In any event, not

only is that district court decision binding on no court, but the

logic of that decision has been criticized on precisely the same

basis the district court adopted and this court now adopts in
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rejecting appellants’ argument. See 8A Charles Alan Wright,

Arthur R. Miller & Richard L. Marcus, Federal Practice and

Procedure § 2115 (2d ed. 2008) (explaining that “[i]t is difficult

to see the basis for the [U.S. Steel Corp.] decision, since as long

as the examination was to be recorded stenographically in the

usual manner as well as electronically the provisions of the rule

were complied with”).

In a last desperate effort to escape defeat, appellants argued

at oral argument that even if we accept the Commission’s

interpretation of Rule 2.8, we should nonetheless remand the

matter for further consideration by the Commission. The

rationale for this late-offered argument lies in the standard of

review of an agency’s interpretation of its own regulations.

Appellants concede that “an agency’s interpretation of its own

regulations is controlling unless plainly erroneous or

inconsistent with the regulations being interpreted.” Long

Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 171 (2007)

(internal quotations omitted). Obviously, we are prepared to

affirm the district court’s enforcement of the subpoenas based

on the agency’s interpretation that the rule permitted it to

conduct videographic as well as stenographic recording of the

proceedings. However, appellants contend that this standard of

review applies to agency resolution of ambiguous regulation, but

should not support affirmance of an interpretation based on an

agency’s erroneous belief that a regulation was unambiguous.

Concededly, the doctrine of Cajun Electric Power Coop., Inc. v.

FERC, 924 F.2d 1132 (D.C. Cir. 1991), supports that reasoning.

However, Cajun Electric does not govern in the present case.

 

It is true that both appellants and the Commission argue for

unambiguous interpretations of the rule in their own favor.

However, this in no way mandates remand. Appellants’

foundation for their argument that the Commission erroneously

believed the rule unambiguous is a statement in the
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Commission’s litigation documents that “[m]oreover, even if

there were any ambiguity in Rule 2.8(b), which there is not, that

ambiguity should be resolved in favor of the Commission’s

interpretation, which is set forth in its decision denying

respondents’ Petition to Quash.” Reply in Further Support of

Petition of the Federal Trade Commission for an Order

Enforcing Subpoenas Ad Testificandum, FTC v. Tarriff, Misc.

No. 08-MC-217 at *12. As this is the only record support

offered by appellants for the late-stated contention, presumably

it is the best that exists. In the language of the reply, the

Commission covers both bases. That is, it proposes that its

interpretation is the only one for an unambiguous rule, but to the

extent the rule has any ambiguity, it is still the Commission’s

reasonable interpretation. We need not remand for the

Commission to redo what it has already done.

Conclusion

In short, we find the position of appellants to be completely

without merit and affirm the decision of the district court.