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Justia › US Law › US Case Law › US Supreme Court › Volume 343 › FTC v. Ruberoid Co.
Federal Trade Commission v. Ruberoid Co.
"products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact compete with the favored purchaser in the resale or distribution of such products."
Upon the company's petition for review, the Court of Appeals affirmed, but refused an order of enforcement.
2. Although, in the company's price discriminations between competing purchasers, the Commission found only differentials of 5% or more, the order was not too broad in prohibiting all price differentials between competing purchasers, in view of the Commission's finding that even very small differences in price were important factors in competition among the company's customers. Pp. 343 U. S. 473-474.
3. Although the price discriminations found were in sales to retailers and applicators, not in sales to wholesalers, the extension of the order to "purchasers who in fact compete" was not unreasonable, in view of the evidence that the company's classification of its customers -- as wholesalers, retailers, and applicators -- did not follow real functional differences. Pp. 343 U. S. 474-475.
4. The order does not enjoin lawful acts by reason of the Commission's failure to except from its prohibitions differentials permitted by the terms of the Act (making allowance for differences in cost of manufacture, sale or delivery, or made in good faith to meet an equally low price of a competitor), since these exceptions are necessarily implicit in every order issued under authority of the Act. Pp. 343 U. S. 475-476.
(a) However, in contesting enforcement or contempt proceedings, the seller may plead only those facts constituting statutory justification which it has not previously had an opportunity to present. Pp. 343 U. S. 476-477.
5. The Commission is not entitled to a decree directing enforcement of an order issued under the Clayton Act in the absence of a showing that a violation of the order has occurred or is imminent. Pp. 343 U. S. 477-480.
(a) The provision of the Act authorizing the Commission to apply for enforcement "if such person fails or neglects to obey such order" prescribes a prerequisite to the court's granting enforcement. Pp. 343 U. S. 478-479.
(b) Disobedience or threatened disobedience of the order is a condition to the granting of enforcement, even where the order comes before the court upon petition for review by the affected party. Pp. 343 U. S. 479-480.
Upon a petition for review of a cease and desist order of the Federal Trade Commission, 46 F.T.C. 379, the Court of Appeals affirmed and granted enforcement of the order. 189 F.2d 893. On rehearing, it struck from its decision that part granting enforcement. 191 F.2d 294. This Court granted certiorari. 342 U.S. 917. Affirmed, p. 343 U. S. 480.
In this case, we granted cross-petitions for certiorari to review the decree of the Court of Appeals affirming, but refusing to enforce, a cease and desist order issued by the Federal Trade Commission to the Ruberoid Co.
"may be substantially to lessen competition in the line of commerce in which [those customers] are engaged, and to injure, destroy, or prevent competition between [those customers], [Footnote 1]"
"[C]ease and desist from discriminating in price: "
"By selling such products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact, compete with the favored purchaser in the resale or distribution of such products. [Footnote 3]"
Upon Ruberoid's petition for review, the Court of Appeals affirmed and granted enforcement of the order. 189 F.2d 893. However, on rehearing, the Court of Appeals amended its mandate to strike that part which directed enforcement. 191 F.2d 294. We granted certiorari to review questions, important in the administration of the Clayton Act, as to the scope and enforcement of Federal Trade Commission orders. 342 U.S. 917.
"the courts will not interfere except where the remedy selected has no reasonable relation to the unlawful practices found to exist."
Id. at 327 U. S. 613.
Commission held that there was insufficient evidence in the record to establish discrimination among wholesalers, as such. Ruberoid contends that the order should have been similarly limited to sales to retailers and applicators. But there was ample evidence that Ruberoid's classification of its customers did not follow real functional differences. Thus, some purchasers which Ruberoid designated as "wholesalers" and to which Ruberoid allowed extra discounts in fact competed with other purchasers as applicators. And the Commission found that some purchasers operated as both wholesalers and applicators. So finding, the Commissioner disregarded these ambiguous labels, which might be used to cloak discriminatory discounts to favored customers, and stated its order in terms of "purchasers who in fact compete." Thus stated, we think the order is understandable, reasonably related to the facts shown by the evidence, and within the broad discretion which the Commission possesses in determining remedies.
The same result follows where the evidence supporting the defense, although not produced in the previous proceedings, was then available to the seller. In short, the seller, in contesting enforcement or contempt proceedings, may plead only those facts constituting statutory justification which it has not had a previous opportunity to present.
"obtain a decree directing enforcement of an order issued under the Clayton Act in the absence of showing that a violation of the order has occurred or is imminent. [Footnote 12]"
"If such person [subject to the order] fails or neglects to obey such order of the commission . . . while the same is in effect, the commission . . . may apply to the circuit court of appeals of the United States . . . for the enforcement of its order. . . . [T]he court . . . shall have power to make and enter . . . a decree affirming, modifying, or setting aside the order of the commission. . . ."
by the commission . . . for the enforcement of its order. . . ."
"The jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or modify orders of the commission . . . shall be exclusive. [Footnote 13]"
repeatedly sought similar amendment of the Clayton Act provisions involved in this case. [Footnote 17] We will not now achieve the same result by reinterpretation in the face of Congress' failure to pass the bills thus brought before it. [Footnote 18] Effective enforcement of the Clayton Act by the Commission may be handicapped by the present provisions, but that is a question of policy for Congress.
doubt that Congress intended its requirement for enforcement to depend entirely upon which party goes to court first.
* Together with No. 504, Ruberoid Co. v. Federal Trade Commission, also on certiorari to the same court.
38 Stat. 730, as amended, 49 Stat. 1526, 15 U.S.C. § 13.
Federal Trade Comm'n v. Morton Salt Co., 334 U. S. 37, 334 U. S. 51-52 (1948); cf. International Salt Co. v. United States, 332 U. S. 392, 332 U. S. 398-400 (1947).
Federal Trade Comm'n v. Cement Institute, 333 U. S. 683, 333 U. S. 726-727 (1948), 15 U.S.C. § 47.
Federal Trade Comm'n v. Morton Salt Co., 334 U. S. 37, 334 U. S. 51-52 (1948); cf. Labor Board v. Express Publishing Co., 312 U. S. 426, 312 U. S. 436-437 (1941).
"True, the Commission did not merely prohibit future discounts, rebates, and allowances in the exact mathematical percentages previously utilized by respondent. Had the order done no more than that, respondent could have continued substantially the same unlawful practices despite the order, by simply altering the discount percentages and the quantities of salt to which the percentages applied."
Federal Trade Comm'n v. Morton Salt Co., 334 U. S. 37, 334 U. S. 52-53 (1948). The discussion following these words in the Morton Salt case, of certain aspects of the order in question there, manifestly affords no support to Ruberoid's contention here. Id. at 334 U. S. 53-54.
Ruberoid suggests a fourth category of purchasers -- manufacturers -- and contends that the order is too broad in that it prohibits discrimination in sales to that group, e.g., in sales of shingles to competing manufacturers of prefabricated houses. We need not consider whether such an order would be too broad, because we do not think the order here applies to such sales. By its terms, the order covers only sales to those competitively engaged "in the resale or distribution of such products (i.e., asbestos or asphalt roofing materials')," and not sales to those who use roofing materials in the fabrication of wholly new and different products.
"[N]othing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered. . . ."
"[N]othing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price . . . was made in good faith to meet an equally low price of a competitor. . . ."
49 Stat. 1526, 15 U.S.C. § 13(b), Standard Oil Co. v. Federal Trade Comm'n, 340 U. S. 231 (1951). Ruberoid does not complain of the omission from the order of the statutory provisos relating to the seller's right to select its own customers and to price changes in response to changing conditions affecting the market for, or the marketability of, the goods concerned. Hence, we do not deal with those defenses here.
Cf. Federal Trade Comm'n v. Morton Salt Co., 334 U. S. 37, 334 U. S. 44-45 (1948), cost justification; Federal Trade Comm'n v. A. E. Staley Mfg. Co., 324 U. S. 746 (1945), "meeting competition" justification.
Where the Commission seeks both affirmance and enforcement of its order in one proceeding, contending that the seller has continued in its unlawful practices since the order was issued, the court, in deciding whether the order should be affirmed, will, of course, review the determination of the Commission in the ordinary manner. But questions thus settled will not be open in deciding whether the order has been violated, and should therefore be enforced.
38 Stat. 735, as amended, 15 U.S.C. § 21.
Brief for the Federal Trade Commission in No. 448, p. 16.
E.g., Federal Trade Comm'n v. Whitney & Co., 192 F.2d 746 (1951); Federal Trade Comm'n v. Standard Brands, Inc., 189 F.2d 510 (1951); Federal Trade Comm'n v. Herzog, 150 F.2d 450 (1945); Federal Trade Comm'n v. Baltimore Paint & Color Works, 41 F.2d 474 (1930); Federal Trade Comm'n v. Balme, 23 F.2d 615 (1928); Federal Trade Comm'n v. Standard Education Society, 14 F.2d 947 (1926). The last three cases cited arose under the Federal Trade Commission Act, but, since the Clayton Act provisions involved here are identical with the corresponding provisions of the Federal Trade Commission Act prior to 1938, 38 Stat. 720, the decisions make no distinction between them.
"To the extent that the order of the Commission is affirmed, the court shall thereupon issue its own order commanding obedience to the terms of such order of the Commission."
52 Stat. 113, 15 U.S.C. § 45(c). Unless the party subject to an order issued under the provisions of the Federal Trade Commission Act files a petition for review within sixty days, the order becomes final and its violation punishable. 52 Stat. 113-114, 15 U.S.C. § 45(g) and (1).
E.g., F.T.C.Ann.Rep. 7-8 (1951); F.T.C.Ann.Rep. 12 (1948); F.T.C.Ann.Rep. 13 (1947); F.T.C.Ann.Rep. 12 (1946).
E.g., H.R.10176, 75th Cong., 3d Sess.; H.R.3402, 81st Cong., 1st Sess.
Accord, e.g., Federal Trade Comm'n v. Fairyfoot Products Co., 94 F.2d 844 (1938); Butterick Co. v. Federal Trade Comm'n, 4 F.2d 910 (1925); L. B. Silver Co. v. Federal Trade Comm'n, 292 F. 752 (1923).
The Federal Trade Commission, in July of 1943, instituted before itself a proceeding against petitioner on a charge of discriminating in price between customers in violation of subsection (a) of § 2 of the Clayton Act as amended by the Robinson-Patman Act, approved June 19, 1936, 15 U.S.C. § 13(a).
Several violations were proved and admitted to have occurred in 1941. No serious opposition was offered to an order to cease and desist from such discriminations, but petitioner did object to being ordered to cease types of violations it never had begun, and asked that any order include a clause to the effect that it did not forbid the price differentials between customers which are expressly allowed by statute.
"cease and desist from discriminating in price: by selling such products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact, compete with the favored purchaser in the resale or distribution of such products."
"We sympathize with the petitioner's position, and can realize the difficulties of conducting business under such general prohibitions. Nevertheless we are convinced that the cause of the trouble is the Act itself, which is vague and general in its wording and which cannot be translated with assurance into any detailed set of guiding yardsticks. [Footnote 2/2]"
which has become an indispensable adjunct to modern government, by returning this case to the Commission to perform its most useful function in administering an admittedly complicated Act.
If the Court of Appeals were correct, it would mean that the intercession of the administrative process between the Congress and the Court does nothing either to define petitioner's duties and liabilities or to impose sanctions. Congress might as well have declared, in these comprehensive terms, a duty not to discriminate, and provided for prosecution of violations in the courts. That, of course, would impose on the courts the task of determining the meaning and application of the law to the facts. But that is just the task that this order imposes upon the courts in event of a contempt proceeding. The courts have derived no more detailed "guiding yardsticks" from the Commission than from Congress. On the contrary, the ultimate enforcement is further confused by the administrative proceeding, because it winds up with an order which literally forbids what the Act expressly allows, and thus adds to the difficulty of eventual sanctions should they become necessary.
Agriculture v. United States et al., No. 710, now pending in this Court) and Justice (United States v. Interstate Commerce Commission, 337 U. S. 426), against the Interstate Commerce Commission, the Department of Justice against the Maritime Commission (Far East Conference v. United States, 342 U. S. 570), the Secretary of the Interior against the Federal Power Commission (United States ex rel. Chapman v. Federal Power Commission, No. 658, now pending in this Court, certiorari granted, 343 U.S. 941). Abstract propositions may not solve concrete cases, but, when basic confusion is responsible for a particular result, resort to the fundamental principles which determine the position of the administrative process in our system may help to illuminate the shortcomings of that result.
manufacturing sale or delivery, and good faith in meeting of the price, services, or facilities of competitors.
This Act exemplifies the complexity of the modern lawmaking task and a common technique for regulatory legislation. It is typical of instances where the Congress cannot itself make every choice between possible lines of policy. It must legislate in generalities, and delegate the final detailed choices to some authority with considerable latitude to conform its orders to administrative, as well as legislative, policies.
A seller may violate this section of the Act without guilty knowledge or intent, and may unwittingly subject himself to a cease and desist order. But neither violation of the Act nor of the order will call for criminal sanctions; neither is even enforceable on behalf of the United States by injunction until after an administrative proceeding has resulted in a cease and desist order and it has been reviewed and affirmed, if review be sought, by the Court of Appeals. Only an enforcement order issued from the court carries public sanctions, [Footnote 2/4] and its violation is punishable as a contempt.
does not bring to a close the making of the law. The Congress is not able or willing to finish the task of prescribing a positive and precise legal right or duty by eliminating all further choice between policies, expediences, or conflicting guides, and so leaves the rounding out of its command to another smaller and specialized agency.
It is characteristic of such legislation that it does not undertake to declare an end result in particular cases, but rather undertakes to control the processes in the administrator's mind by which he shall reach results. Because Congress cannot predetermine the weight and effect of the presence or absence of all of the competing considerations or conditions which should influence decisions regulating modern business, it attempts no more than to indicate generally the outside limits of the ultimate result and to set out matters about which the administrator must think when he is determining what within those confines the compulsion in a particular case is to be.
Such legislation does not confer on any of the parties in interest the right to a particular result, nor even to what we might think ought to be the correct one, but it gives them the right to a process for determining these rights and duties. Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U. S. 246, 341 U. S. 251; Phelps Dodge Corp. v. Labor Board, 313 U. S. 177, 313 U. S. 194-195.
last touch of selection which neither the primary legislator nor the reviewing court can supply. The only reason for the intervention of an administrative body is to exercise a grant of unexpended legislative power to weigh what the legislature wants weighed, to reduce conflicting abstract policies to a concrete net remainder of duty or right. Then, and then only, do we have a completed expression of the legislative will in an administrative order which we may call a sort of secondary legislation, ready to be enforced by the courts.
The rise of administrative bodies probably has been the most significant legal trend of the last century, and perhaps more values today are affected by their decisions than by those of all the courts, review of administrative decisions apart. They also have begun to have important consequences on personal rights. Cf. United States v. Spector, 343 U. S. 169. They have become a veritable fourth branch of the Government, which has deranged our three-branch legal theories much as the concept of a fourth dimension unsettles our three-dimensional thinking.
down, and "quasi" is a smooth cover which we draw over our confusion, as we might use a counterpane to conceal a disordered bed.
"In administering the provisions of the statute in respect of 'unfair methods of competition,' that is to say, in filling in and administering the details embodied by that general standard, the commission acts in part quasi-legislatively and in part quasi-judicially."
Humphrey's Executor v. United States, 295 U. S. 602, 295 U. S. 628.
and obligations are patent, revenue and customs laws. Only where the law is not yet clear of policy elements, and therefore not ready for mere executive enforcement, is it withdrawn from the executive department and confided to independent tribunals. If the tribunal to which such discretion is delegated does nothing but promulgate as its own decision the generalities of its statutory charter, the rationale for placing it beyond executive control is gone.
That the work of a Commission in translating an abstract statute into a concrete cease and desist order in large measure escapes judicial review because of its legislative character is an axiom of administrative law, as the Court's decision herein shows. In delegating the function of filling out the legislative will in particular cases, Congress must not leave the statute too empty of meaning. Courts look to its standards to see whether the Commission's result is within the prescribed terms of reference -- whether the secondary legislation properly derives from the primary legislation.
much larger immunity from judicial review than does a determination by a purely executive agency. The court, in review of a case under the tax law or the patent law, where the legislative function has been exhausted and policy considerations are settled in the Acts themselves, follows the same mental operation as the executive officer. On the facts, there results an obligation to pay tax or there is a right to a patent. The court can deduce these legal rights or obligations from the statute in the same manner as the executive officer. Hence, review of such executive decisions proceeds with no more deference to the administrative judgment than to a decision of a lower court.
Very different, however, is the review of the "quasi-legislative" decision. There, the right or liability of the parties is not determined by mere application of statute to the facts. The right or obligation results not merely from the abstract expression of the will of Congress in the statute, but from the Commission's completion and concretization of that will in its order. Cf. Montana-Dakota Utilities Co. v. Northwestern Public Service Co., supra, at 341 U. S. 251; Phelps Dodge Corp. v. Labor Board, supra.
On review, the Court does not decide whether the correct determination has been reached. So far as the Court is concerned, a wide range of results may be equally correct. In review of such a decision, the Court does not at all follow the same mental processes as the Commission did in making it, for the judicial function excludes (in theory at least) the policymaking or legislative element, which rightfully influences the Commission's judgment but over which judicial power does not extend. Since it is difficult for a court to determine from the record where quasi-legislative policymaking has stopped and quasi-judicial application of policy has begun, the entire process escapes very penetrating scrutiny. Cf.
Federal Power Commission v. Hope Natural Gas Co., 320 U. S. 591.
Returning to this case, I cannot find that ten years of litigation have served any useful purpose whatever. No doubt, it is administratively convenient to blanket an industry under a comprehensive prohibition in bulk -- an undiscriminating prohibition of discrimination. But this not only fails to give the precision and concreteness of legal duties to the abstract policies of the Act, it really promulgates an inaccurate partial paraphrase of its indeterminate generalities. Instead of completing the legislation by an order which will clarify the petitioner's duty, it confounds confusion by literally ordering it to cease what the statute permits it to do.
This Court and the court below defer solution of the problems inherent in such an order on the theory that, if petitioner offends again, there may be an enforcement order, and if it then offends again, there may be a contempt proceeding, and that will be time enough for the court to decide what the order against the background of the Act really means. While I think this less than justice, I am not greatly concerned about what the Court's decision does to this individual petitioner, for whom I foresee no danger more serious than endless litigation.
But I am concerned about what it does to administrative law.
To leave definition of the duties created by an order to a contempt proceeding is for the courts to end where they should begin. Injunctions are issued to be obeyed, even when justification to issue them may be debatable. United States v. United Mine Workers of America, 330 U. S. 258, 330 U. S. 289 et seq., 330 U. S. 307. But, in this case, issues that seem far from frivolous as to what is forbidden are reserved for determination when punishment for disobedience is sought. The Court holds that some modifications are "implicit" in this order. Why should they not be made explicit? Why approve an order whose literal terms we know go beyond the authorization, on the theory that its excesses may be retracted if ever it needs enforcement? Why invite judicial indulgence toward violation by failure to be specific, positive and concrete?
It does not impress me as lawyerly practice to leave to a contempt proceeding the clarification of the reciprocal effects of this Act and order, and determination of the effect of statutory provisos which are then to be read into the order. The courts cannot and should not assume that function. It is, by our own doctrine, a legislative or "quasi-legislative" function, and the courts cannot take over the discretionary functions of the Commission which should enter into its determinations. Plainly this order is not in shape to enforce, and does not become so by the Court's affirmance.
this Act into a "set of guiding yardsticks," admittedly now lacking. If that cannot be done, there should be no judicial approval for an order to cease and desist from we don't know what.
If that were done, I should be included to accept the Government's argument that, along with affirmance, enforcement may be ordered. I see no real sense, when the case is already before the Court and is approved, in requiring one more violation before its obedience will be made mandatory on pain of contempt. But, as this order stands, I am not surprised that enforcement should be left to some later generation of judges.
A comprehensive study has pointed out the early failure of this Commission (and it applies as well to others) to clarify and develop the law, and thereby avoid litigation, by careful published opinions. Henderson, The Federal Trade Commission 334.
Ruberoid Co. v. Federal Trade Commission, 189 F.2d 893, 894.
15 U.S.C. § 21, vests enforcement in the Interstate Commerce Commission, where applicable, to certain regulated common carriers; in the Federal Communications Commission as to wire and radio communications; Civil Aeronautics Board as to air carriers; Federal Reserve Board as to banks, etc., and Federal Trade Commission as to all other types of commerce.
15 U.S.C. §§ 1-4, 8, 9.
For emphasis and appreciation of this concept of American administrative law and of the function of the administrative tribunal as we have evolved it, I am indebted to an unpublished treatise by Dr. Robert F. Weissenstein, whose Viennese and European background, education, and practice gave him a perspective attained with difficulty by us who are so accustomed to our own process.
"the legislation is a skeleton piece of legislation left to be filled up in all its substantial and material particulars by the action of rules to be made by the Board of Trade. . . . [I]t was the intention of the Legislature, having expressed the general object, and having provided the necessary penalty, to leave the subordinate legislation, so to speak, to be carried out by the Board of Trade."
Institute of Patent Agents v. Lockwood,  A.C. 347, 356-357.
For an excellent study of English "Delegated Legislation Today," see Willis, Parliamentary Powers of English Government Departments, c. II, p. 47. For the extent to which this system has been used in England, see Lord Macmillan, Local Government Law and Administration in England and Wales, Vol. I, Preface.
"which shall be as nearly adequate as economically feasible without curtailing opportunity for employment, to maintain a minimum standard of living necessary for health, efficiency, and general wellbeing . . . ,"
but not in excess of 40 cents per hour. Id. at 15. Similar provisions empowered the Board to determine maximum hours provided that in no case should the maximum be set at less than 40 hours. Id. at 16. Likewise, the Board was empowered to require the elimination of substandard labor conditions. Id. at 17.
The House Bill, on the other hand, itself laid down the minimum wage and maximum hour requirements, id. 22-23, and gave to the Secretary of Labor discretion only to determine which industries were within the terms of the law, plus the power to investigate compliance with the law. Id. at 23. The Act as ultimately adopted followed the House Bill; although there was created the office of Administrator of the Wage and Hour Division in the Department of Labor, the Administrator was given discretion only in minor matters relating to the applicability of the congressional standards. 52 Stat. 1060, 29 U.S.C. § 201 et seq.
The Administration favored the plan of delegating legislative discretion to an independent administrative body to apply general standards to concrete cases. See testimony of Secretary of Labor Frances Perkins, Joint Hearings before the Senate Committee on Educations and Labor and the House Committee on Labor on S. 2475 and H.R. 7200, 75th Cong., 1st Sess. 178. However, the attempt of Congress itself to complete this complex law for enforcement by the Executive, through the courts, not only flooded the courts with litigation, but the courts' interpretation of the Act, contrary to the policy which Congress thought it had indicated, had disastrous consequences. 61 Stat. 84, 29 U.S.C. § 251 et seq.
If the independent agencies could realize how much trustworthiness judges give to workmanlike findings and opinions, and how their causes are prejudiced on review by slipshod, imprecise findings and failure to elucidate by opinion the process by which ultimate determinations have been reached, their work and their score on review would doubtless improve. See Henderson, The Federal Trade Commission, c. VI, p. 327. See also Commission on Organization of the Executive Branch of the Government, Task Force Report on Regulatory Commissions (App. N.) pp. 129-130.

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