Source: https://www.legalcrystal.com/case/104698/ftc-vs-standard-oil-co-california
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Matched Legal Cases: ['§ 10', '§ 5', '§ 45', '§ 5', '§ 45', '§ 10', '§ 701', '§ 10', '§ 704', '§ 10', '§ 704', '§ 45', '§ 3', '§ 5', '§ 554', '§ 577', '§ 3', '§ 45', '§ 45', '§ 45', '§ 45', '§ 704', '§ 706', '§ 1291', '§ 10', '§ 10', '§ 701', '§ 2', '§ 551', '§ 551', '§ 551', '§ 701', '§ 551', '§ 10', '§ 551', '§ 701']

Ftc Vs Standard Oil Co of California - Citation 104698 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Ftc Vs. Standard Oil Co. of California - Court Judgment	LegalCrystal Citationlegalcrystal.com/104698CourtUS Supreme CourtDecided OnDec-15-1980Case Number449 U.S. 232AppellantFtcRespondentStandard Oil Co. of CaliforniaExcerpt:
the federal trade commission (ftc) issued a complaint against respondent and several other major oil companies, alleging that the ftc had "reason to believe" that the companies were violating $ 5 of the federal trade commission act (act), which prohibits unfair methods of competition or unfair or deceptive acts or practices in commerce. while adjudication of the.....Judgment:
The FTC's issuance of its complaint was not "final agency action" under § 10(c) of the APA, and hence was not judicially reviewable before the conclusion of the administrative adjudication. Pp.
(a) The issuance of the complaint was not a definitive ruling or regulation and had no legal force or practical effect upon respondent's daily business other than the disruptions that accompany any major litigation.
, distinguished. Immediate judicial review would serve neither efficiency nor enforcement of the Act. Pp.
449 U. S. 239
(b) Although respondent, by requesting the FTC to withdraw its complaint and awaiting the FTC's refusal to do so, may have exhausted its administrative remedy as to the averment of a "reason to believe," the FTC's refusal to withdraw the complaint does not render the complaint a "definitive" action. Such refusal does not augment the complaint's legal force or practical effect on respondent, nor does it diminish the concern for efficiency and enforcement of the Act. P.
449 U. S. 243
(c) The expense and disruption in defending itself, even if substantial, does not constitute irreparable injury to respondent. P.
449 U. S. 244
(d) Respondent's challenge to the FTC's complaint will not become "insulated" from judicial review if it is not reviewed before the FTC's adjudication concludes, since, under the APA, a court of appeals reviewing a cease-and-desist order has the power to review alleged unlawfulness in the issuance of an agency complaint, assuming that the issuance of the complaint is not "committed to agency discretion by law." Pp.
(e) Since issuance of the complaint averring "reason to believe" is a step toward, and will merge in, the FTC's decision on the merits, the claim of illegality in issuance of the complaint is not subject to judicial review as a "collateral" order.
POWELL, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, and REHNQUIST, JJ., joined. STEVENS, J., filed an opinion concurring in the judgment,
449 U. S. 247
On July 18, 1973, the Federal Trade Commission issued and served upon eight major oil companies, including Standard Oil Company of California (Socal), [
] a complaint averring that the Commission had "reason to believe" that the companies were violating § 5 of the Federal Trade Commission Act, 38 Stat. 719, as amended, 15 U.S.C. § 45, [
] and stating the Commission's charges in that respect. [
] The Commission issued the complaint under authority of § 5(b) of the Act, 15 U.S.C. § 45(b), which provides:
On May 1 1975, Socal filed a complaint against the Commission in the District Court for the Northern District of California, alleging that the Commission had issued its complaint without having "reason to believe" that Socal was violating the Act. [
] Socal sought an order declaring that the issuance of the complaint was unlawful and requiring that the complaint be withdrawn. Socal had sought this relief from the Commission and been denied. [
] In support of its allegation and request, Socal recited a series of events that preceded the issuance of the complaint and several events that followed. In Socal's estimation, the only inference to be drawn from these events was that the Commission lacked sufficient evidence when it issued the complaint to warrant a belief that Socal was violating the Act.
Immediately, the Commission subpoenaed three Socal officers to testify before it, and they did so in late June. This examination was the Commission's only inquiry as to Socal's books and records, and the only interview of a Socal officer, prior to the issuance of the complaint. [
] On July 6, the Commission sent to Senator Jackson a "Preliminary Federal Trade Commission Staff Report on Its Investigation of the Petroleum Industry," requesting that the report not be made public because it had not yet "been evaluated or approved by the Commission." On July 9, Senator Jackson informed the Commission by letter that he intended to publish the report as a congressional committee reprint unless the Commission explained by July 13 why public release of the report would be improper. The Commission responded on July 11 that public release of the report, which the Commission characterized as "an internal staff memorandum," would be
F.2d 1381 (1979). It held the Commission's determination whether evidence before it provided the requisite reason to believe is "committed to agency discretion," and therefore is unreviewable according to § 10 of the Administrative Procedure Act (APA), 5 U.S.C. § 701(a)(2). The Court of Appeals held, however, that the District Court could inquire whether the Commission in fact had made the determination that it had reason to believe that Socal was violating the Act. If the District Court were to find upon remand that the Commission had issued the complaint "solely because of outside pressure or with complete absence of a
reason to believe' determination," 596 F.2d at 1386, then it was to order the Commission to dismiss the complaint. The Court of Appeals further held that the issuance of the complaint was "final agency action" under § 10(c) of the APA, 5 U.S.C. § 704.
The Commission averred in its complaint that it had reason to believe that Socal was violating the Act. That averment is subject to judicial review before the conclusion of administrative adjudication only if the issuance of the complaint was "final agency action" or otherwise was "directly reviewable" under § 10(c) of the APA, 5 U.S.C. § 704. We conclude that the issuance of the complaint was neither. [
The Commission's issuance of its complaint was not "final agency action." The Court observed in
(1967), that "[t]he cases dealing with judicial review of administrative actions have interpreted the
finality' element in a pragmatic way." In
for example, the publication of certain regulations by the Commissioner of Food and Drugs was held to be final agency action subject to judicial review in an action for declaratory judgment brought prior to any Government action for enforcement. The regulations required manufacturers of prescription drugs to print certain information on drug labels and advertisements. The regulations were "definitive" statements of the Commission's position,
387 U. S. 151
, and had a "direct and immediate . . . effect on the day-to-day business" of the complaining parties.
. They had "the status of law," and "immediate compliance with their terms
In addition, the question presented by the challenge to the regulations was a "legal issue . . . fit for judicial resolution."
387 U. S. 153
. Finally, because the parties seeking the declaratory judgment represented almost all the parties affected by the regulations, "a preenforcement challenge . . . [was] calculated to speed enforcement" of the relevant Act.
. Taking "a similarly flexible view of finality,"
387 U. S. 150
, and in view of similar pragmatic considerations, the Court had held the issuance of administrative regulations to be "final agency action" in
] The issuance of the complaint in this case, however, is materially different.
By its terms, the Commission's averment of "reason to believe" that Socal was violating the Act is not a definitive statement of position. It represents a threshold determination that further inquiry is warranted and that a complaint should initiate proceedings. To be sure, the issuance of the complaint is definitive on the question whether the Commission avers reason to believe that the respondent to the complaint is violating the Act. [
] But the extent to which the respondent may challenge the complaint and its charges proves that the averment of reason to believe is not "definitive" in a comparable manner to the regulations in
and the cases it discussed.
Section 5 of the Act, 15 U.S.C. § 45(b), in conjunction with Commission regulations, 16 CFR §§ 3.41-3.46 (1980), and § 5 of the APA, 5 U.S.C. § 554 (1976 ed. and Supp. III), requires that the complaint contain a notice of hearing at which the respondent may present evidence and testimony before an administrative law judge to refute the Commission's charges. Either party to the adjudication may appeal an adverse decision of the administrative law judge to the full Commission, 5 U.S.C. § 577; 16 CFR § 3.52 (1980);
15 U.S.C. § 45(c), which then may dismiss the complaint.
15 U.S.C. § 45(c). If, instead, the Commission enters an order requiring the respondent to cease and desist from engaging in the challenged practice, the respondent still is not bound by the Commission's decision until judicial review is complete or the opportunity to seek review has lapsed. 15 U.S.C. § 45(g). [
] Thus, the averment of reason to believe is a prerequisite to a definitive agency position on the question whether Socal violated the Act, but itself is a determination only that adjudicatory proceedings will commence.
Cf. Ewing v. Mytinger & Casselberry, Inc.,
Chicago & Southern Air Lines, Inc. v. Waterman S.S. Corp.,
Serving only to initiate the proceedings, the issuance of the complaint averring reason to believe has no legal force comparable to that of the regulation at issue in
nor any comparable effect upon Socal's daily business. The regulations in
forced manufacturers to "risk serious criminal and civil penalties" for noncompliance, 387 U.S. at
. Socal does not contend that the issuance of the complaint had any such legal or practical effect, except to impose upon Socal the burden of responding to the charges made against it. Although this burden certainly is substantial, it is different in kind and legal effect from the burdens attending what heretofore has been considered to be final agency action.
In contrast to the complaint's lack of legal or practical effect upon Socal, the effect of the judicial review sought by Socal is likely to be interference with the proper functioning of the agency and a burden for the courts. Judicial intervention into the agency process denies the agency an opportunity to correct its own mistakes and to apply its expertise.
(1975). Intervention also leads to piecemeal review which at the least is inefficient and upon completion of the agency process might prove to have been unnecessary.
McGee v. United States,
402 U. S. 479
402 U. S. 484
(1969). Furthermore, unlike the review in
judicial review to determine whether the Commission decided that it had the requisite reason to believe would delay resolution of the ultimate question whether the Act was violated. Finally, every respondent to a Commission complaint
Socal first contends that it exhausted its administrative remedies by moving in the adjudicatory proceedings for dismissal of the complaint. By thus affording the Commission an opportunity to decide upon the matter, Socal contends that it has satisfied the interests underlying the doctrine of administrative exhaustion.
. The Court of Appeals agreed. 596 F.2d at 1387. We think, however, that Socal and the Court of Appeals have mistaken exhaustion for finality. By requesting the Commission to withdraw its complaint and by awaiting the Commission's refusal to do so, Socal may well have exhausted its administrative remedy as to the averment of reason to believe. But the Commission's refusal to reconsider its issuance of the complaint does not render the complaint a "definitive" action. The Commission's refusal does not augment the complaint's legal force or practical effect upon Socal. Nor does the refusal diminish the concerns for efficiency and enforcement of the Act
Socal also contends that it will be irreparably harmed unless the issuance of the complaint is judicially reviewed immediately. Socal argues that the expense and disruption of defending itself in protracted adjudicatory proceedings constitutes irreparable harm. As indicated above, we do not doubt that the burden of defending this proceeding will be substantial. But "the expense and annoyance of litigation is
part of the social burden of living under government.'"
304 U. S. 222
(1938). As we recently reiterated: "Mere litigation expense, even substantial and unrecoupable cost, does not constitute irreparable injury."
Socal further contends that its challenge to the Commission's averment of reason to believe can never be reviewed unless it is reviewed before the Commission's adjudication concludes. As stated by the Court of Appeals, the alleged unlawfulness in the issuance of the complaint "is likely to become insulated from any review" if deferred until appellate review of a cease-and-desist order. 596 F.2d at 1387. Socal also suggests that the unlawfulness will be "insulated" because the reviewing court will lack an adequate record and it will address only the question whether substantial evidence supported the cease-and-desist order. [
authorizes a court of appeals to order that the Commission take additional evidence. [
] 15 U.S.C. § 45(c). Thus, a record which would be inadequate for review of alleged unlawfulness in the issuance of a complaint can be made adequate. We also note that the APA specifically provides that a "preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action," 5 U.S.C. § 704, and that the APA also empowers a court of appeals to "hold unlawful and set aside agency action . . . found to be . . . without observance of procedure required by law." 5 U.S.C. § 706. Thus, assuming that the issuance of the complaint is not "committed to agency discretion by law," [
] a court of appeals reviewing a cease-and-desist order has the power to review alleged unlawfulness in the issuance of a complaint. We need not decide what action a court of appeals should take if it finds a cease-and-desist order to be supported by substantial evidence but the complaint to have been issued without the requisite reason to believe. It suffices to hold that the possibility does not affect the application of the finality rule.
Cf. Macauley v. Waterman S.S. Corp.,
There remains only Socal's contention that the claim of illegality in the issuance of the complaint is a "collateral" order subject to review under the doctrine of
(1949). It argues that the Commission's issuance of the complaint averring reason to believe
. In that diversity case, a District Court refused to apply a state statute requiring shareholders bringing a derivative suit to post a security bond for the defendant's litigation expenses. This Court held that the District Court's order was subject to immediate appellate review under 28 U.S.C. § 1291. Giving that section a "practical, rather than a technical, construction," the Court concluded that this order "did not make any step toward final disposition of the merits of the case, and will not be merged in final judgment."
does not avail Socal. What we have said above makes clear that the issuance of the complaint averring reason to believe is a step toward, and will merge in, the Commission's decision on the merits. Therefore, review of this preliminary step should abide review of the final order.
Because the Commission's issuance of a complaint averring reason to believe that Socal has violated the Act is not "final agency action" under § 10(c) of the APA, it is not judicially reviewable before administrative adjudication concludes. [
The other seven respondents to the complaint were Exxon Corp., Texaco, Inc., Gulf Oil Corp., Mobil Oil Corp., Standard Oil Co. (Indiana), Shell Oil Corp., and Atlantic Richfield Co.
In re Exxon Corporation, et al.,
Docket No. 8934.
In re Exxon Corp.,
83 F.T.C. 1759, 1760 (1974).
We agree with Socal and with the Court of Appeals that the issuance of the complaint is "agency action." The language of the APA and its legislative history support this conclusion. According to § 10 of the APA, 5 U.S.C. § 701(b)(2), "agency action" has the meaning given to it by § 2, 5 U.S.C. § 551. That section provides that "
agency action' includes the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act," 5 U.S.C. § 551(13), and also that "`order' means the whole or a part of a final disposition . . . of an agency in a matter other than rule making. . . ." 5 U.S.C. § 551(6). According to the legislative history of the APA:
In view of our conclusion that the issuance of the complaint was not "
agency action," we do not address the question whether the issuance of a complaint is "committed to agency discretion by law." 5 U.S.C. § 701(a)(2).
the Court held reviewable a regulation of the Federal Communications Commission proscribing certain contractual arrangements between chain broadcasters and local stations. The Commission did not have authority to regulate such contracts; its regulation asserted only that the Commission would not license stations which maintained such contracts. In a challenge to the regulation before any enforcement action had been brought, the Court noted that the regulations had "the force of law before their sanctions are invoked, as well as after," that they were "promulgated by order of the Commission," and that "the expected conformity to them causes injury cognizable by a court of equity." 316 U.S. at
the Court held reviewable an order of the Interstate Commerce Commission specifying commodities that were deemed not to be "agricultural . . . commodities." The carriage of such commodities exempted vehicles from ICC supervision. The order was held to be "final agency action" in a challenge brought by a carrier transporting commodities that the ICC's order had not included in its terms.
the Court also held reviewable as "final agency action" a Federal Communications Commission regulation announcing a policy not to issue television licenses to applicants already owning five such licenses. The rulemaking was complete and "operate[d] to control the business affairs of Storer." 351 U.S. at
351 U. S. 199
The Commission held as much in its order denying Socal's motion for reconsideration of the motion to dismiss.
The Court of Appeals additionally suggested that the complaint would be "insulated" from review because the alleged unlawfulness would be moot if Socal prevailed in the adjudication. These concerns do not support a conclusion that the issuance of a complaint averring reason to believe is "final agency action." To the contrary, one of the principal reasons to await the termination of agency proceedings is "to obviate all occasion for judicial review."
449 U. S. 242
(1969). Thus, the possibility that Socal's challenge may be mooted in adjudication warrants the requirement that Socal pursue adjudication, not shortcut it.
Contrary to the suggestion of JUSTICE STEVENS in his concurring opinion, we do not hold that the issuance of the complaint is reviewable agency action. We leave open the question whether the issuance of the complaint is unreviewable because it is "committed to agency discretion by law."
"Agency action" is a statutory term that identifies the conduct of executive and administrative agencies that Congress intended to be reviewable in federal court. [
] In general, the term encompasses formal orders, rules, and interpretive decisions that crystallize or modify private legal rights. [
] Agency action that is merely "preliminary, procedural, or intermediate" is subject to judicial review at the termination of the proceeding in which the interlocutory ruling is made. [
] Today
the Court holds that an agency decision to initiate administrative proceedings is in the interlocutory category. In a footnote,
-239, n. 7, the Court determines whether the decision is ever reviewable and in the body of the opinion the Court determines when it is reviewable.
In my opinion, Congress did not intend to authorize any judicial review of decisions to initiate administrative proceedings. The definition of "agency action" found in 5 U.S.C. § 551(13) plainly contemplates action that affects legal rights in some way. As the Court points out,
, the mere issuance of a complaint has no legal effect on the respondent's rights. Although an agency's decision to file a complaint may have a serious impact on private parties who must respond to such complaints, that impact is comparable to that caused by a private litigant's decision to file a lawsuit or a prosecutor's decision to present evidence to a grand jury. A decision to initiate proceedings does not have the same kind of effect on legal rights as "an agency rule, order, license [or other sanction]." [
] I am aware of nothing in the Administrative Procedure Act, or its history, that indicates that Congress intended to authorize judicial review of this type of decision.
The practical consequences of the Court's contrary holding -- that the Commission's prelitigation decision, although not reviewable now, will be reviewable later [
] -- confirms my opinion that the Court's decision does not reflect the intent of Congress. If the Commission ultimately prevails on the merits of its complaint, Socal surely will not be granted immunity because the Commission did not uncover the evidence of illegality until after the complaint was filed. On the other hand, if Socal prevails, there will be no occasion to review the contention that it now advances, because the only relief it seeks is a dismissal of the Commission's complaint. Socal is surely correct when it argues that, unless review is available now, meaningful review can never be had.
The Court's casual reading of the Administrative Procedure Act is unfortunate for another reason. The disposition of a novel and important question of federal jurisdiction in a footnote will lend support to the notion that federal courts have a "
" authorizing judicial supervision of almost everything that the Executive Branch of Government may do. Because that notion has an inevitable impact on the quantity and quality of judicial service, federal judges should be especially careful to construe their own authority strictly. I therefore respectfully disagree with the Court's perfunctory analysis of the "agency action" issue. I do, however, concur in its judgment because I am persuaded that the Commission's decision to initiate a complaint is not "agency action" within the meaning of § 10(b) of the Administrative Procedure Act, 5 U.S.C. $ 702.
the term "order" in 5 U.S.C. § 551(6),
, n. 7, implies that the Court regards the initial step in a proceeding as a "part" of the final order terminating the proceeding. In my opinion, that is a rather plain misreading of the definition. An ordinary reader would interpret "part" of an order to refer to one of several paragraphs or sections in that document, not to actions that preceded the entry of the order. Under a contrary reading, presumably the Commission's action in filing a brief directed to some preliminary issue in the proceeding would be considered "part" of the agency action terminating the proceedings, and therefore subject to judicial review. Section 551(6) reads, in full, as follows:
Because judicial review of the Commission's decision is not specifically proscribed by statute, the decision to file a complaint will be reviewable later unless the Commission, by a showing of "clear and convincing" evidence, can overcome the strong presumption against a determination that its action was "committed to agency discretion" under 5 U.S.C. § 701(a)(2).